JP: Household Spending

April 27, 2017 06:30 CDT

Consensus Actual Previous
Year over Year -0.4% -1.3% -3.8%

Household spending in Japan, in real terms, contracted 1.3 percent on the year in March, an improvement on the 3.8 drop percent in February, but weaker than the consensus forecast for a fall of 0.4 percent. Spending, in seasonally adjusted real terms, fell 2.0 percent on the month in March, after an increase of 2.5 percent in February.

The smaller year-on-year fall in real headline household spending in March reflected similar improvements in key categories of household spending. Spending on fuel, light and water charges fell 2.0 percent on the year in March after contracting by 4.2 percent in February, while spending on food fell by 1.3 percent after a drop of 5.8 percent the previous month. Year-on-year growth in spending on clothing and footwear and transportation and communication also strengthened in March relative to February.

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 - also showed a smaller year-on-year decline of 1.9 percent in March, compared with a drop of 3.7 percent in February.

Average monthly income per household was around Y446,000 in February, down 1.4 percent on the 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.