JP: Household Spending

Thu Mar 08 17:30:00 CST 2018

Consensus Actual Previous
Year over Year -1.2% 1.9% -0.1%
Month over Month 2.7% -2.5%

Household spending in Japan, in real terms, rose 1.9 percent on the year in January, up from a decline of 0.1 percent in December. The increase of 1.9 percent in January has been adjusted from 2.0 percent in order to account for a discontinuity in the collection of sample data. Spending, in seasonally adjusted real terms, advanced 2.7 percent on the month in January after dropping 2.5 percent in December.

Stronger headline year-on-year growth in January largely reflects a rebound in spending on housing. This fell sharply by 23.3 percent on the year in December but recovered to grow by 10.1 percent in January. Growth in other major spending categories was relatively steady, with year-on-year growth in spending on on food falling from 1.1 percent to1.0 percent and on utilities falling from 7.6 percent to 6.6 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 weaker year-on-year growth in December, up 2.4 percent on the year after increasing 2.9 percent previously. Average monthly income per household was around Y442,000 in Janaury, down 1.5 percent in real terms on the year.

Retail sales data released last week showed year-on-year growth slowed from 3.6 percent in December to 1.6 percent in January.

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.