JP: Household Spending

Thu Nov 30 17:30:00 CST 2017

Consensus Actual Previous
Year over Year -0.4% 0.0% -0.3%
Month over Month -2.0% 0.4%

Household spending in Japan, in real terms, was unchanged on the year in October after falling by 0.3 percent in September, stronger than the consensus forecast for a decline of 0.4 percent. Spending, in seasonally adjusted real terms, fell 2.0 percent on the month in October after rising 0.4 percent in September.

The increase in headline year-on-year growth in October mainly reflects stronger spending on transport and communication. This grew by 3.9 percent in real terms on the year in October after falling by 2.1 percent in September. Spending on fuel, light and water charges, though still weak, also improved, down 2.7 percent on the year in October after dropping 2.1 percent in September. This was partly offset by weaker year-on-year growth in spending on housing , down sharply from 12.2 percent to 1.8 percent, and food, down from an increase of 0.9 percent to no change.

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 somewhat stronger (but still negative) year-on-year growth in October, down 0.3 percent on the year after falling by 0.7 percent in September. This measure fell 1.8 percent on the month seasonally adjusted, after no change in September.

Average monthly income per household was around Y501,000 in September, up 2.9 percent in real terms on the year.

Retail sales data released earlier in the week showed year-on-year growth weakened from an increase of 2.3 percent in September to a fall of 0.2 percent in October.

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.