JP: Household Spending

March 2, 2017 05:30 CST

Consensus Actual Previous Revised
Year over Year -0.3% -1.2% -0.3%
Month over Month 0.5% -0.6% -0.8%

Household spending in Japan, in real terms, fell 1.2 percent on the year in January, down from a drop of 0.3 percent in December and weaker than the consensus forecast for a fall of 0.3 percent. Spending, in seasonally adjusted real terms, rose 0.5 percent on the month in January, after a 0.8 percent decline in December.

The year-on-year fall on real headline household spending in January reflected weaker growth in spending on housing, down 6.7 percent in January after an increase of 0.4 percent in December. Spending on fuel, light and water charges also increased at a slower pace in January, up 1.6 percent after rising 2.8 percent in December. Spending on food fell by 2.6 percent on the year in January after decreasing 3.2 percent in December.

In contrast to the weaker headline number, 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 - showed stronger growth in January. This measure increased by 0.3 percent on the year after dropping by 1.5 percent year-on-year in December and 1.9 percent on the year in November.

Average monthly income per household was around Y441,000 in January, an increase of 1.0 percent year-on-year in real terms.

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.