| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Month over Month | 1.1% | -0.3% to 1.5% | 2.7% | -2.1% | -1.4% |
| Year over Year | -0.3% | -1.2% to 0.3% | -0.3% | -1.3% |
Highlights
Japan's real household spending posted an as-expected slight drop on the year in January, with more people switching to discount mobile communications plans amid rising costs for food and utilities, but the pace of decline slowed as the economy continued reopening amid the eighth wave of the pandemic, data released Friday by the Ministry of Internal Affairs and Communications showed.
Expenditures rebounded sharply on the month after an unexpected second consecutive dip in December.
Some people continued traveling and eating out more freely, taking advantage of the government's discount program launched in October and resumed in January after a brief suspension during the yearend and new year holidays, while others remained cautious about stepping out.
The Econoday Consensus Divergence Index stood at minus 10, a little below zero, which indicates the Japanese economy is performing slightly worse than expected. Excluding the impact of inflation, the index was at minus 6.
Real average spending by households with two or more people slipped 0.3 percent on the year in January for the third straight drop after falling 1.3 percent in December and coming in line with the median economist forecast of a 0.3 percent fall (forecasts ranged from a 1.2 percent drop to a 0.3 percent gain). It was the sixth decrease in 12 months. November's 1.2 percent drop was the first in six months following a 1.2 percent rise in October.
The decrease in January was led by lower spending on telecommunications fees, which pushed down overall expenditures by 0.54 percentage point, as well as fish and grains (rice and noodles). Mobile phone users continued switching to discount plans while the number of landline users has been shrinking. People have been spending less on groceries, particularly fish, compared to the earlier phase of the pandemic when households had cooked more at home to avoid contact.
On the upside, spending on hotels and eating out as well as air and land transportation continued increasing in January compared to a year earlier, when the government urged restaurants and bars to cut business hours and people to stay home during the Omicron storm. In 2022, the government resumed restrictions on social and economic activities in 35 of the 47 prefectures in late January and extended strict Covid rules for Tokyo and 17 other jurisdictions until March 21.
On the month, real average household spending rebounded a seasonally adjusted 2.7 percent in December after falling 1.4 percent (revised up from a 2.1 percent drop) in December, a revised 0.4 percent in November and rising a revised 0.7 percent in October. It was the sixth increase in 12 months and stronger than the consensus forecast of a 1.1 percent rise (economist forecasts ranged from a 0.3 percent dip to a 1.5 percent rise). The real spending adjusted index stood at 103.6 in January, reaching the highest point since 104.9 in April 2021.
The average real income of households with salaried workers posted the fourth straight year-over-year drop, down 1.7 percent (up 3.3 percent in nominal terms) in January, after falling 0.4 percent (up a nominal 4.4 percent) in December. The annual consumer inflation rate was above 4 percent as more firms are passing higher costs onto consumers.
The main bread-earner's real income in the average household marked the first drop in two months, down 2.8 percent (up 2.2 percent in nominal terms) in January, after rising 1.3 percent (up a nominal 6.2 percent) in December, which was the first year-on-year increase in nine months led by yearend bonus payments.
The average spouse income posted the 12th straight rise in January, up a real 8.9 percent (up a nominal 14.5 percent), after rising 8.5 percent (up a nominal 13.7 percent) the previous month. Firms tend to use non-regular workers as buffers during economic swings. As the economy reopens further, retailers, hotels and restaurants are hiring more people.
Expenditures rebounded sharply on the month after an unexpected second consecutive dip in December.
Some people continued traveling and eating out more freely, taking advantage of the government's discount program launched in October and resumed in January after a brief suspension during the yearend and new year holidays, while others remained cautious about stepping out.
The Econoday Consensus Divergence Index stood at minus 10, a little below zero, which indicates the Japanese economy is performing slightly worse than expected. Excluding the impact of inflation, the index was at minus 6.
Real average spending by households with two or more people slipped 0.3 percent on the year in January for the third straight drop after falling 1.3 percent in December and coming in line with the median economist forecast of a 0.3 percent fall (forecasts ranged from a 1.2 percent drop to a 0.3 percent gain). It was the sixth decrease in 12 months. November's 1.2 percent drop was the first in six months following a 1.2 percent rise in October.
The decrease in January was led by lower spending on telecommunications fees, which pushed down overall expenditures by 0.54 percentage point, as well as fish and grains (rice and noodles). Mobile phone users continued switching to discount plans while the number of landline users has been shrinking. People have been spending less on groceries, particularly fish, compared to the earlier phase of the pandemic when households had cooked more at home to avoid contact.
On the upside, spending on hotels and eating out as well as air and land transportation continued increasing in January compared to a year earlier, when the government urged restaurants and bars to cut business hours and people to stay home during the Omicron storm. In 2022, the government resumed restrictions on social and economic activities in 35 of the 47 prefectures in late January and extended strict Covid rules for Tokyo and 17 other jurisdictions until March 21.
On the month, real average household spending rebounded a seasonally adjusted 2.7 percent in December after falling 1.4 percent (revised up from a 2.1 percent drop) in December, a revised 0.4 percent in November and rising a revised 0.7 percent in October. It was the sixth increase in 12 months and stronger than the consensus forecast of a 1.1 percent rise (economist forecasts ranged from a 0.3 percent dip to a 1.5 percent rise). The real spending adjusted index stood at 103.6 in January, reaching the highest point since 104.9 in April 2021.
The average real income of households with salaried workers posted the fourth straight year-over-year drop, down 1.7 percent (up 3.3 percent in nominal terms) in January, after falling 0.4 percent (up a nominal 4.4 percent) in December. The annual consumer inflation rate was above 4 percent as more firms are passing higher costs onto consumers.
The main bread-earner's real income in the average household marked the first drop in two months, down 2.8 percent (up 2.2 percent in nominal terms) in January, after rising 1.3 percent (up a nominal 6.2 percent) in December, which was the first year-on-year increase in nine months led by yearend bonus payments.
The average spouse income posted the 12th straight rise in January, up a real 8.9 percent (up a nominal 14.5 percent), after rising 8.5 percent (up a nominal 13.7 percent) the previous month. Firms tend to use non-regular workers as buffers during economic swings. As the economy reopens further, retailers, hotels and restaurants are hiring more people.
Market Consensus Before Announcement
Rising costs for daily necessities and the eighth wave of the pandemic appear to have led to a third straight year-over-year drop in real household spending in Japan, down 0.3 percent in January, after falling sharper-than-expected 1.3 percent in December, when more people subscribed to discount mobile communications plans and refrained from buying increasingly more expensive new smartphones. Spending is expected to post a 1.1 percent rebound on the month after a 2.1 percent drop amid signs that the drag from the pandemic is easing.
Definition
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.
Description
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.
