JP: Household Spending

June 29, 2017 06:30 CDT

Consensus Actual Previous
Year over Year -0.5% -0.1% -1.4%
Month over Month 0.7% 0.5%

Household spending in Japan, in real terms, fell 0.1 percent on the year in May, improving from the 1.4 percent decline in April, and above the consensus forecast for a fall of 0.5 percent. Spending, in seasonally adjusted real terms, rose 0.7 percent on the month in May after rising 0.5 percent in April.

Spending on transportation and communication recorded the biggest increase on the year in May, up 6.8 percent in real terms, with spending also up on furniture and medical care. Spending on fuel, light and water charges fell 2.2 percent on the year in May, as did spending on food, with housing spending down 8.8 percent.

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 a smaller year-on-year decline of 0.8 percent in May, compared with a 1.3 percent fall in April.

Average monthly income per household was around Y421,000 in May, down 1.7 percent on the year in real terms.

Retail sales data released earlier in the week showed year-on-year growth slowed from 3.2 percent in April to 2.0 percent in May.

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.