JP: Household Spending

January 30, 2017 05:30 CST

Consensus Actual Previous
Year over Year -0.6% -0.3% -1.5%
Month over Month -0.6% -0.6%

Household spending in Japan, in real terms, fell 0.3 percent year-on-year in December, up from a drop of 1.5 percent in November and somewhat better than the consensus forecast for a fall of 0.6 percent. Spending, in seasonally adjusted real terms, fell 0.6 percent month-on-month in December, as it did in November.

The small year-on-year fall on real headline household spending in December reflected stronger growth in spending on housing, up 0.4 percent in December following a fall of 7.7 percent in December, and spending on fuel, light and water charges, up 2.8 percent in December following an increase of 1.2 percent in November. Spending on food fell 3.2 percent in December, little changed from a fall of 3.4 year-on-year in November.

A measure of core household spending - which excludes housing, motor vehicles and other volatile items and tends to track more closely the consumption component of gross domestic product - fell 1.5 percent year-on-year in December after declining 1.9 percent on the year in November.

Average monthly income per household was around Y925,000 in December, an increase of 2.3 percent year-on-year. This increase in consumers' purchasing power is consistent with other data published today showing low unemployment and solid jobs growth.

Household Spending is an important gauge of personal consumption, which accounts for roughly 55 percent of Japan's gross domestic product. It is part of the monthly Family Income and Spending Report.

The report looks at spending of households and gives a picture of consumer spending. Increases in household spending are favorable for the Japanese economy because high consumer spending generally leads to higher levels of economic growth. Higher spending is also a sign of consumer optimism, as households confident in their future outlook will spend more. The preferred number is the change from the previous year. The data are part of the family income and expenditure survey which is released at the same time as the employment and unemployment data.