| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Month over Month | 0.9% | 0.8% to 2.2% | 1.3% | -1.2% | -1.1% |
| Year over Year | 5.4% | 4.8% to 6.7% | 5.7% | 5.0% | 5.1% |
Highlights
Japanese retail sales posted their 15th straight year-over-year increase in May, thanks to faster deliveries of automobiles, gradually recovering department stores and higher prices for food and beverages, mitigating the impact of falling fuel costs and sluggish appliances sales, data released Thursday by the Ministry of Economy, Trade and Industry showed.
The Econoday Consensus Divergence Index stood at plus 18, above zero, which indicates the Japanese economy is performing slightly better than expected after being flat earlier. Excluding the impact of inflation, the index was at plus 25.
Japanese policymakers believe the economy still needs continued monetary and fiscal policy support to achieve sustainable wage growth and stable 2 percent inflation, pointing that the output gap remains in negative territory, although it has narrowed recently.
Retail sales rose a preliminary 5.7 percent on the year in May for the 15th straight year-over-year rise after rising 5.1 percent (revised up from a 5.0 percent rise) in April, 6.9 percent in March and 7.3 percent in February. The increase was higher than the median economist forecast of a 5.4 percent rise (forecasts ranged from 4.8 percent to 6.7 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 marked a slight rebound by 1.3 percent on a seasonally adjusted basis in May for the first rise in two months following an expected decrease of 1.1 percent (revised up from a 1.2 percent drop) in April and increases of 0.3 percent in March and 2.1 percent in February. It was firmer than the median forecast of a 0.9 rise (forecasts ranged from 0.8 percent to 2.2 percent gains).
The ministry maintained its assessment after upgrading it for the second straight month 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 0.2 percent in May after rising 0.5 percent the previous month.
Sales of automobiles rose 19.1 percent on year in May for the ninth straight gain after rising 14.9 percent in April. Improving supply chains are supporting auto production and deliveries.
Sales of food and beverages, which have the largest share in retail sales, posted their eighth straight rise, up 6.6 percent, after rising at the same pace the previous month as suppliers continued raising sales prices to reflect a spike in import and production costs seen earlier.
General merchandise sales at department stores and supermarkets marked the 22nd straight year-over-year gain, but the pace of increase decelerated to 3.9 percent in May from 6.9 percent in April and 5.4 percent in March. Sales of apparel and accessories recorded the third straight drop, down 3.7 percent, after falling 0.6 percent the previous month.
Sales of fuels fell 1.8 percent on the year in May after falling 2.9 percent in April, 2.7 percent in March and rising just 0.2 percent in February. Energy prices have generally eased after a spike last year while the government has been trying to cap retail gasoline price markups by providing subsidies to refineries. The process of phasing out the subsidy program began in June and is scheduled to end in September.
Demand for medicine and cosmetics remained solid, up 10.8 percent in May, after a 7.1 percent gain in April. By contrast, sales of machinery and equipment (largely consumer electronics) marked their third straight year-over-year drop, down 5.6 percent, following a 7.2 percent drop.
Industry data released last week showed department store sales marked the 15th straight year-over-year rise in May, up 6.3 percent, after showing larger gains of 9.6 percent in April, 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 4.9 percent, showing a steady improvement from sharper drops seen earlier.
The Japan Department Stores Association noted that sales of clothing, personal goods and cosmetics were solid as traveling for both business and pleasure increased under widely eased Covid public health rules. The Golden Week holidays from late April to early May also attracted many shoppers to retail stores, it said.
The Econoday Consensus Divergence Index stood at plus 18, above zero, which indicates the Japanese economy is performing slightly better than expected after being flat earlier. Excluding the impact of inflation, the index was at plus 25.
Japanese policymakers believe the economy still needs continued monetary and fiscal policy support to achieve sustainable wage growth and stable 2 percent inflation, pointing that the output gap remains in negative territory, although it has narrowed recently.
Retail sales rose a preliminary 5.7 percent on the year in May for the 15th straight year-over-year rise after rising 5.1 percent (revised up from a 5.0 percent rise) in April, 6.9 percent in March and 7.3 percent in February. The increase was higher than the median economist forecast of a 5.4 percent rise (forecasts ranged from 4.8 percent to 6.7 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 marked a slight rebound by 1.3 percent on a seasonally adjusted basis in May for the first rise in two months following an expected decrease of 1.1 percent (revised up from a 1.2 percent drop) in April and increases of 0.3 percent in March and 2.1 percent in February. It was firmer than the median forecast of a 0.9 rise (forecasts ranged from 0.8 percent to 2.2 percent gains).
The ministry maintained its assessment after upgrading it for the second straight month 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 0.2 percent in May after rising 0.5 percent the previous month.
Sales of automobiles rose 19.1 percent on year in May for the ninth straight gain after rising 14.9 percent in April. Improving supply chains are supporting auto production and deliveries.
Sales of food and beverages, which have the largest share in retail sales, posted their eighth straight rise, up 6.6 percent, after rising at the same pace the previous month as suppliers continued raising sales prices to reflect a spike in import and production costs seen earlier.
General merchandise sales at department stores and supermarkets marked the 22nd straight year-over-year gain, but the pace of increase decelerated to 3.9 percent in May from 6.9 percent in April and 5.4 percent in March. Sales of apparel and accessories recorded the third straight drop, down 3.7 percent, after falling 0.6 percent the previous month.
Sales of fuels fell 1.8 percent on the year in May after falling 2.9 percent in April, 2.7 percent in March and rising just 0.2 percent in February. Energy prices have generally eased after a spike last year while the government has been trying to cap retail gasoline price markups by providing subsidies to refineries. The process of phasing out the subsidy program began in June and is scheduled to end in September.
Demand for medicine and cosmetics remained solid, up 10.8 percent in May, after a 7.1 percent gain in April. By contrast, sales of machinery and equipment (largely consumer electronics) marked their third straight year-over-year drop, down 5.6 percent, following a 7.2 percent drop.
Industry data released last week showed department store sales marked the 15th straight year-over-year rise in May, up 6.3 percent, after showing larger gains of 9.6 percent in April, 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 4.9 percent, showing a steady improvement from sharper drops seen earlier.
The Japan Department Stores Association noted that sales of clothing, personal goods and cosmetics were solid as traveling for both business and pleasure increased under widely eased Covid public health rules. The Golden Week holidays from late April to early May also attracted many shoppers to retail stores, it said.
Market Consensus Before Announcement
Japanese retail sales are expected post their 15th straight year-over-year increase in May, up 5.4 percent after a revised 5.1 percent rise in April, amid a continued pickup in department store and new vehicle sales and due to higher prices for food and beverages, mitigating the impact of falling fuel costs and sluggish appliances sales. On the month, sales are seen rising 0.9 percent after a revised 1.1 percent drop.
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.
