JP: Household Spending

Mon May 07 18:30:00 CDT 2018

Consensus Actual Previous
Year over Year 1.1% -0.2% 0.1%
Month over Month -0.1% -1.5%

Household spending in Japan, in real terms, fell 0.2 percent on the year in March, weakening from an increase of 0.1 percent in February. Spending, in seasonally adjusted real terms, fell 0.1 percent on the month after dropping 1.5 percent previously.

Officials also published adjusted figures to account for a discontinuity in the collection of sample data. These show spending fell 0.7 percent on the year in March in real terms.

The fall in headline year-on-year growth in March largely reflected a sharper drop in spending on housing, down 17.7 percent on the year after declining 12.3 percent previously. Growth in other major spending categories also softened, with spending on food falling 0.2 percent on the year after an increase of 0.5 percent previously and year-on-year growth in spending on utilities falling from 6.1 percent to 1.4.

Other components of spending, however, showed some improvement. 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 - advanced 1.2 percent on the year in March, up 0.9 percent in February.

Average monthly income per household was around Y454,000 in March, up 2.4 percent in real terms on the year (but down 3.8 percent using figures adjusted for the discontinuity in sample data).

Broadly in line with the household spending data, retail sales data released late April showed year-on-year growth slowed from 1.7 percent in February to 1.0 percent in March.

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.