| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Month over Month | 0.8% | -0.6% to 1.0% | -1.2% | 0.6% | 0.3% |
| Year over Year | 7.3% | 5.6% to 8.4% | 5.0% | 7.2% | 6.9% |
Highlights
Japanese retail sales posted their 14th straight year-over-year increase in April amid a continued pickup in department store and new vehicle sales, but the pace of increase decelerated for two months in a row as clothing and appliances sales slumped and fuel prices eased, data released Wednesday by the Ministry of Economy, Trade and Industry showed.
After solid first-quarter growth, Japan's economy in the April-June quarter is expected to be propped up by resilient consumer spending and business investment despite global uncertainties. The focus is on how households will cope with elevated costs for daily necessities in fiscal 2023 that began in April, when large firms on average are raising wages at the fastest pace in 30 years to secure workers.
The Econoday Consensus Divergence Index stood at minus 11, below zero, which indicates the Japanese economy is performing slightly worse than expected after outperforming recently. Excluding the impact of inflation, the index was at minus 10.
Japanese policymakers believe the economy still needs continued monetary and fiscal policy support to achieve sustainable wage growth and stable 2 percent inflation, pointing out that the output gap remains in negative territory by a wide margin.
Retail sales rose a preliminary 5.0 percent on the year in April for the 14th straight year-over-year rise after rising 6.9 percent (revised down from a 7.2 percent rise) in March and 7.3 percent in February. The increase was lower than the median economist forecast of a 7.3 percent rise (forecasts ranged from 5.6 percent to 8.4 percent gains). The 7.3 percent rise in February is the fastest since the 8.3 percent increase in May 2021.
On the month, retail sales unexpectedly plunged 1.2 percent on a seasonally adjusted basis in April for the first drop in five months after rising 0.3 percent (revised down from a 0.6 percent gain) and 2.1 percent in February. It was weaker than the median forecast of a 0.8 percent rise (forecasts ranged from a 0.6 percent drop to a 1.0 percent rise).
The ministry maintained its assessment after upgrading it for the second straight time in March, saying retail sales are"on an uptrend." Previously, it had said retail sales were"on a gradual uptrend." It noted that the three-month moving average in seasonally adjusted retail sales rose 0.5 percent in April for the 10th straight rise after rising 1.0 percent the previous month.
Sales of automobiles rose 15.1 percent on year in April after rising 18.2 percent in March. Sales of food and beverages, which have the largest share in retail sales, posted their seventh straight rise, up 6.6 percent, after a 5.4 percent gain the previous month as suppliers continued raising sales prices to reflect high import costs.
General merchandise sales at department stores and supermarkets marked the 14th straight year-over-year gain, up 6.9 percent in April, following a 5.4 percent rise in March. Sales of apparel and accessories recorded the second straight drop, down 1.3 percent, after slipping 0.5 percent the previous month.
Sales of fuels fell 3.3 percent on the year in April after falling 2.7 percent in March and rising just 0.2 percent in February. Energy prices have eased after a spike last year while the government has been trying to cap retail gasoline price markups by providing subsidies to refineries.
Demand for medicine and cosmetics remained solid, up 7.0 percent in April, after a 10.1 percent gain in March. By contrast, sales of machinery and equipment (largely consumer electronics) marked their second straight year-over-year drop, down 6.9 percent, following a 3.9 percent drop.
Industry data released last week showed department store sales marked the 14th straight year-over-year rise in April, up 9.6 percent, after showing larger gains of 9.8 percent in March, 20.4 percent in February and 15.1 percent in January. Compared to the pre-pandemic April 2019, sales last month were down 6.3 percent, showing some improvement from sharper drops seen earlier.
The Japan Department Stores Association noted that sales of clothing and personal goods were supported by eased public health rules while demand for luxurious brand name products remained strong. The relatively weak yen and relaxed Covid border rules continued to boost spending by foreign visitors, up 209.9 percent on the year, but it remained 40.0 percent below the level seen in April 2019.
After solid first-quarter growth, Japan's economy in the April-June quarter is expected to be propped up by resilient consumer spending and business investment despite global uncertainties. The focus is on how households will cope with elevated costs for daily necessities in fiscal 2023 that began in April, when large firms on average are raising wages at the fastest pace in 30 years to secure workers.
The Econoday Consensus Divergence Index stood at minus 11, below zero, which indicates the Japanese economy is performing slightly worse than expected after outperforming recently. Excluding the impact of inflation, the index was at minus 10.
Japanese policymakers believe the economy still needs continued monetary and fiscal policy support to achieve sustainable wage growth and stable 2 percent inflation, pointing out that the output gap remains in negative territory by a wide margin.
Retail sales rose a preliminary 5.0 percent on the year in April for the 14th straight year-over-year rise after rising 6.9 percent (revised down from a 7.2 percent rise) in March and 7.3 percent in February. The increase was lower than the median economist forecast of a 7.3 percent rise (forecasts ranged from 5.6 percent to 8.4 percent gains). The 7.3 percent rise in February is the fastest since the 8.3 percent increase in May 2021.
On the month, retail sales unexpectedly plunged 1.2 percent on a seasonally adjusted basis in April for the first drop in five months after rising 0.3 percent (revised down from a 0.6 percent gain) and 2.1 percent in February. It was weaker than the median forecast of a 0.8 percent rise (forecasts ranged from a 0.6 percent drop to a 1.0 percent rise).
The ministry maintained its assessment after upgrading it for the second straight time in March, saying retail sales are"on an uptrend." Previously, it had said retail sales were"on a gradual uptrend." It noted that the three-month moving average in seasonally adjusted retail sales rose 0.5 percent in April for the 10th straight rise after rising 1.0 percent the previous month.
Sales of automobiles rose 15.1 percent on year in April after rising 18.2 percent in March. Sales of food and beverages, which have the largest share in retail sales, posted their seventh straight rise, up 6.6 percent, after a 5.4 percent gain the previous month as suppliers continued raising sales prices to reflect high import costs.
General merchandise sales at department stores and supermarkets marked the 14th straight year-over-year gain, up 6.9 percent in April, following a 5.4 percent rise in March. Sales of apparel and accessories recorded the second straight drop, down 1.3 percent, after slipping 0.5 percent the previous month.
Sales of fuels fell 3.3 percent on the year in April after falling 2.7 percent in March and rising just 0.2 percent in February. Energy prices have eased after a spike last year while the government has been trying to cap retail gasoline price markups by providing subsidies to refineries.
Demand for medicine and cosmetics remained solid, up 7.0 percent in April, after a 10.1 percent gain in March. By contrast, sales of machinery and equipment (largely consumer electronics) marked their second straight year-over-year drop, down 6.9 percent, following a 3.9 percent drop.
Industry data released last week showed department store sales marked the 14th straight year-over-year rise in April, up 9.6 percent, after showing larger gains of 9.8 percent in March, 20.4 percent in February and 15.1 percent in January. Compared to the pre-pandemic April 2019, sales last month were down 6.3 percent, showing some improvement from sharper drops seen earlier.
The Japan Department Stores Association noted that sales of clothing and personal goods were supported by eased public health rules while demand for luxurious brand name products remained strong. The relatively weak yen and relaxed Covid border rules continued to boost spending by foreign visitors, up 209.9 percent on the year, but it remained 40.0 percent below the level seen in April 2019.
Market Consensus Before Announcement
Japanese retail sales are likely to post their 14th straight year-over-year increase in April, with the pace of increase seen accelerating to 7.3 percent from a downwardly revised 6.9 percent gain in March, led by a continued rise in department store sales and new vehicle sales. Retail sales are seen up 0.8 percent for a fifth consecutive month-over-month increase after a revised 0.3 percent rise.
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.
