JP: Household Spending

Thu Jul 27 18:30:00 CDT 2017

Consensus Actual Previous
Year over Year 0.5% 2.3% -0.1%
Month over Month 1.5% 0.7%

Household spending in Japan, in real terms, advanced 2.3 percent on the year in June, improving from the 0.1 percent decline in May, and well above the consensus forecast for an increase of 0.5 percent. This follows fifteen consecutive months in negative territory. Spending, in seasonally adjusted real terms, rose 1.5 percent on the month in June after rising 0.7 percent in May.

Stronger headline growth was largely driven by spending on housing, up 25.1 percent in real terms on the year after a drop of 8.8 percent in May. Officials attributed this strength in part to a surge in home renovation spending due to lower than usual rainfall during the month. Spending on other major categories remains weak, with year-on-year growth still negative for food, fuel light and water charges, and clothing and footwear.

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 small year-on-year increase of 0.1 percent in June, compared with a 0.8 percent fall in May. This measure rose 0.8 percent on the month seasonally adjusted, after falling 1.1 percent in May.

Average monthly income per household was around Y735,000 in June, up 0.1 percent on the year in real terms after a drop of 1.7 percent in May.

Retail sales data also released today showed year-on-year growth picked up slightly from 2.0 percent in May to 2.1 percent in June.

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.