JP: Household Spending

Mon Jan 29 17:30:00 CST 2018

Consensus Actual Previous
Year over Year 1.5% -0.1% 1.7%
Month over Month -2.5% 2.1%

Household spending in Japan, in real terms, fell 0.1 percent on the year in December, weakening from an increase of 1.7 percent in November. Spending, in seasonally adjusted real terms, fell 2.5 percent on the month in December after an increase of 2.1 percent in November.

The drop in headline year-on-year growth in December was mainly driven by weaker spending on food and housing. Spending on food grew by 1.1 percent in December, down from growth of 2.2 percent in November, while spending on housing dropped 23.3 percent on the year after a decline of 7.9 percent previously. Spending on furniture, clothing, and transport and communication also slowed in December. This was partly offset by an increase in year-on-year growth in utilities spending from 2.5 percent to 7.6 percent.

In contrast to the 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 year-on-year growth in December, up 2.9 percent on the year after increasing 2.7 percent previously. This measure, however, fell 1.2 percent on the month seasonally adjusted, after a increase of 2.7 percent in November.

Average monthly income per household was around Y941,000 in December, up just 0.4 percent in real terms on the year.

Retail sales data also released today showed an increase in year-on-year growth from 2.1 percent in November to 3.6 percent in December.

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.