| Consensus | Consensus Range | Actual | Previous | |
|---|---|---|---|---|
| Month over Month | -0.4% | -1.1% to 1.4% | 1.9% | 1.1% |
| Year over Year | 4.1% | 3.3% to 5.5% | 6.3% | 3.8% |
Highlights
Japanese retail sales posted their 11th straight year-over-year increase in January, with the pace of increase above forecast and accelerating from December, as the economy continued to reopen amid easing fears about the impact of the recent spike in new Covid cases, data released Tuesday by the Ministry of Economy, Trade and Industry showed.
Sales marked a solid gain on the month in January, also coming in stronger than expected, as cold weather supported demand for winter clothing and the supply of automobiles continued improving.
Consumer spending on goods has been solid while expenditures on services have been supported by the government's domestic travel discount program, which was launched in October and resumed in January on a smaller scale after a brief suspension during the yearend and new year holidays.
The monthly Economy Watchers Survey, which was conducted by the Cabinet Office from Jan. 25 to Jan. 31 and released on Feb. 8, indicated that confidence remained weak in January, hit by severe winter weather and rising costs, but the outlook was more positive on expectations that the pandemic will ease in a few months after a recent spike and that firms will raise wages for fiscal 2023.
The Econoday Consensus Divergence Index stood at minus 24, below zero, which indicates the Japanese economy is performing worse than expected after outperforming earlier. Excluding the impact of inflation, the index was at minus 20.
Japanese policymakers have said the economy needs continued monetary and fiscal policy support to achieve sustainable wage growth and stable 2 percent inflation.
Retail sales jumped a preliminary 6.3 percent on the year in January for the 11th straight year-over-year rise after rising 3.8 percent in December, 2.5 percent in November and 4.4 percent in October. The increase was much higher than the median economist forecast of a 4.1 percent rise (forecasts ranged from 3.3 percent to 5.5 percent gains). It was the fastest rise since the 8.3 percent increase in May 2021.
The government plans to downgrade its classification of Covid-19 on May 8 from a level similar to the strict Class 2 category, which includes tuberculosis, to something closer to Class 5, which includes the seasonal flu. After the initial Omicron variant storm in February 2022, the government eased public health restrictions in March and has continued reopening the economy. It lifted strict its Covid border control in October, leading to a pickup in spending by visitors from other countries.
On the month, retail sales surged 1.9 percent on a seasonally adjusted basis in January after rising 1.1 percent in December and marking their first drop in five months in November, down 1.3 percent, and rising 0.3 percent in October. The latest figure was stronger than the median forecast of a 0.4 percent fall (forecasts ranged from a 1.1 percent drop to a 1.4 percent rise).
The ministry upgraded its assessment, saying retail sales are"on a gradual uptrend." Previously, it had said, retail sales were"picking up." It noted that the three-month moving average in seasonally adjusted retail sales rose 0.6 percent in January for a sixth straight gain after rising 0.1 percent in the previous two months.
Sales marked a solid gain on the month in January, also coming in stronger than expected, as cold weather supported demand for winter clothing and the supply of automobiles continued improving.
Consumer spending on goods has been solid while expenditures on services have been supported by the government's domestic travel discount program, which was launched in October and resumed in January on a smaller scale after a brief suspension during the yearend and new year holidays.
The monthly Economy Watchers Survey, which was conducted by the Cabinet Office from Jan. 25 to Jan. 31 and released on Feb. 8, indicated that confidence remained weak in January, hit by severe winter weather and rising costs, but the outlook was more positive on expectations that the pandemic will ease in a few months after a recent spike and that firms will raise wages for fiscal 2023.
The Econoday Consensus Divergence Index stood at minus 24, below zero, which indicates the Japanese economy is performing worse than expected after outperforming earlier. Excluding the impact of inflation, the index was at minus 20.
Japanese policymakers have said the economy needs continued monetary and fiscal policy support to achieve sustainable wage growth and stable 2 percent inflation.
Retail sales jumped a preliminary 6.3 percent on the year in January for the 11th straight year-over-year rise after rising 3.8 percent in December, 2.5 percent in November and 4.4 percent in October. The increase was much higher than the median economist forecast of a 4.1 percent rise (forecasts ranged from 3.3 percent to 5.5 percent gains). It was the fastest rise since the 8.3 percent increase in May 2021.
The government plans to downgrade its classification of Covid-19 on May 8 from a level similar to the strict Class 2 category, which includes tuberculosis, to something closer to Class 5, which includes the seasonal flu. After the initial Omicron variant storm in February 2022, the government eased public health restrictions in March and has continued reopening the economy. It lifted strict its Covid border control in October, leading to a pickup in spending by visitors from other countries.
On the month, retail sales surged 1.9 percent on a seasonally adjusted basis in January after rising 1.1 percent in December and marking their first drop in five months in November, down 1.3 percent, and rising 0.3 percent in October. The latest figure was stronger than the median forecast of a 0.4 percent fall (forecasts ranged from a 1.1 percent drop to a 1.4 percent rise).
The ministry upgraded its assessment, saying retail sales are"on a gradual uptrend." Previously, it had said, retail sales were"picking up." It noted that the three-month moving average in seasonally adjusted retail sales rose 0.6 percent in January for a sixth straight gain after rising 0.1 percent in the previous two months.
Market Consensus Before Announcement
Japanese retail sales are expected to have posted their 11th straight year-over-year increase in January, with the pace of increase seen accelerating slightly to 4.1 percent from December's 3.8 percent, as the economy continued to open amid easing fears about the impact of the recent spike in new Covid cases.
Industry data released last week showed department store sales marked the 11th straight year-over-year rise in January, up 15.1 percent, after rising 4.0 percent in December. The Japan Department Stores Association noted that New Year's sales drew more people in the absence of strict public health rules while low temperatures supported demand for winter clothing and other seasonal goods. The relatively weak yen and relaxed Covid border rules continued to boost spending by foreign visitors.
Industry data released last week showed department store sales marked the 11th straight year-over-year rise in January, up 15.1 percent, after rising 4.0 percent in December. The Japan Department Stores Association noted that New Year's sales drew more people in the absence of strict public health rules while low temperatures supported demand for winter clothing and other seasonal goods. The relatively weak yen and relaxed Covid border rules continued to boost spending by foreign visitors.
Definition
Retail Sales measure the total receipts at stores that sell durable and nondurable goods. The data are part of the Preliminary Report on the Current Survey of Commerce.
Description
Another way to look at consumer spending in addition to the household spending survey is through the retail sales report. This report gives the total value of goods and services sold each month at retail outlets. The preferred number is the change from the previous year. The report serves as a direct gauge of consumption and consumer confidence. Consumer spending is one of the most important leading indicators for the Japanese economy. Increasing sales signal consumer confidence and economic growth, but higher consumption also leads to inflationary pressures.
