JP: Household Spending

Mon Jun 04 18:30:00 CDT 2018

Consensus Actual Previous
Year over Year 0.9% -1.3% -0.2%
Month over Month -1.6% -0.1%

Household spending in Japan, in real terms, fell 1.3 percent on the year in April, the third consecutive year-on-year decline, weaker than the fall of 0.7 percent in March, and well below the consensus forecast for an increase of 0.9 percent. Spending, in seasonally adjusted real terms, fell 1.6 percent on the month after dropping 0.1 percent previously.

Year-on-year changes have been adjusted to account for a discontinuity in the collection of sample data. Using adjusted data, spending also fell 1.3 percent on the year in April in real terms.

The fall in headline year-on-year growth in April largely reflected weaker spending on fuel and utilities, and transport and communication. Real spending on fuel and utilities fell 5.6 percent on the year in April, down from an increase of 1.0 percent in March, while spending on transport and communication fell 1.2 percent on the year after increasing 2.0 percent previously. Spending on housing, in contrast, rebounded after sharp falls in the two previous months, increasing 3.0 percent in April after falling 18.1 percent in March. Spending on food was weak but steady, down 0.8 percent on the year after dropping 0.7 percent previously.

Other components of spending were also subdued. 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 - fell 0.6 percent on the year in April after increasing by 0.7 percent in March. Spending on clothing, education, medical care and goods all grew at a slower pace.

Average monthly income per household was around Y495,000 in April, down 0.2 percent in real terms on the year using discontinuity-adjusted figures (but up 4.1 percent using unadjusted figures).

In contrast to the household spending data, retail sales data released last week showed year-on-year growth picked up from 1.0 percent in March to 1.6 percent in April.

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.