| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Month over Month | 1.9% | 1.2% to 2.0% | 2.1% | -0.4% | -0.6% |
| Year over Year | 5.8% | 2.8% to 6.7% | 6.8% | 5.9% | 5.6% |
Highlights
Japanese retail sales jumped on the year in July, thanks to smoother deliveries of automobiles and continued recovery at department stores aided by hot weather and an influx of foreign visitors, data released Thursday by the Ministry of Economy, Trade and Industry showed.
Elevated prices for food and beverages continued pushing up sales values while fuel prices also picked up after generally easing from last year's spike.
The Econoday Consensus Divergence Index stood at minus 28, below zero, which indicates the Japanese economy is performing worse than expected after underperforming with a smaller margin earlier. Excluding the impact of inflation, the index was at minus 34.
Japanese policymakers believe the economy still needs continued monetary and fiscal policy support to achieve sustainable wage growth and stable 2 percent inflation.
Retail sales rose a preliminary 6.8 percent on the year in July for the 17th straight year-over-year rise after rising 5.6 percent (revised down from 5.9 percent) in June, 5.8 percent in May, 5.1 percent in April, 6.9 percent in March and 7.3 percent in February. The increase was higher than the median economist forecast of a 5.8 percent rise (forecasts ranged from 2.8 percent to 6.7 percent gains). The 7.3 percent rise in February remains the highest since the 8.3 percent increase in May 2021.
On the month, retail sales rose 2.1 percent on a seasonally adjusted basis in July for the first rise in two months following a 0.6 percent fall (revised down from a 0.4 percent drop), a 1.4 percent rise in May, a 1.1 percent fall 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 1.9 percent increase (forecasts ranged from a 1.2 percent drop to a 2.0 percent rise).
The ministry maintained its assessment after upgrading it for the second straight month in March, saying retail sales are"on an uptrend." The three-month moving average in seasonally adjusted retail sales rose 0.9 percent in July after dipping 0.1 percent the previous month.
Sales of automobiles rose 8.1 percent on year in July for the 11th straight gain but the pace of increase decelerated from 17.7 percent in June. Improving supply chains and easing chip shortages have been supporting auto production and shipments.
Sales of food and beverages, a category which has the largest share in retail sales, posted their 10th straight rise, up 8.0 percent, after rising 6.9 percent the previous month as suppliers continued raising sales prices to reflect high import and production costs seen earlier.
General merchandise sales at department stores and supermarkets marked the 23rd straight year-over-year gain, up 6.3 percent in July, after rising 4.5 percent in June. Sales of apparel and accessories recorded the first rise in five months amid hot and humid weather, up 3.0 percent, after falling 2.0 percent the previous month, when sales were partly dampened by rain storms.
Sales of fuels rose 2.8 percent on the year in July, also for the first rise in five months after falling 4.1 percent in June, as the government is scaling back its energy subsidies. Overall energy costs have eased in line with softer markets until recently 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 but officials plan to extend the program through year end as gasoline prices have surged in recent weeks.
Demand for medicine and cosmetics remained solid, up 6.8 percent in July, after a 9.4 percent gain in June. Sales of machinery and equipment (largely consumer electronics) marked their first year-over-year rise in five months, up 4.3 percent, following a 4.2 percent drop.
Industry data released last week showed department store sales marked the 17th straight year-over-year rise in July, up 8.6 percent, following increases of 7.0 percent in June, 6.3 percent in May, 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 July 2019, sales last month were down a modest 1.5 percent, showing a steady improvement from sharper drops seen earlier.
The Japan Department Stores Association noted that the prolonged heat wave supported demand for summer clothing and other seasonal goods while sales of luxurious brand name products were also solid. Family events as well as anime and food exhibits attracted shoppers, it said.
The weak yen and widely relaxed Covid border rules continued pushing up spending by foreign visitors, up 206.6 percent on the year. It was now 11.4 percent above the level seen in July 2019, overcoming the drag from the pandemic, after falling just 0.8 percent in June from four years earlier.
Elevated prices for food and beverages continued pushing up sales values while fuel prices also picked up after generally easing from last year's spike.
The Econoday Consensus Divergence Index stood at minus 28, below zero, which indicates the Japanese economy is performing worse than expected after underperforming with a smaller margin earlier. Excluding the impact of inflation, the index was at minus 34.
Japanese policymakers believe the economy still needs continued monetary and fiscal policy support to achieve sustainable wage growth and stable 2 percent inflation.
Retail sales rose a preliminary 6.8 percent on the year in July for the 17th straight year-over-year rise after rising 5.6 percent (revised down from 5.9 percent) in June, 5.8 percent in May, 5.1 percent in April, 6.9 percent in March and 7.3 percent in February. The increase was higher than the median economist forecast of a 5.8 percent rise (forecasts ranged from 2.8 percent to 6.7 percent gains). The 7.3 percent rise in February remains the highest since the 8.3 percent increase in May 2021.
On the month, retail sales rose 2.1 percent on a seasonally adjusted basis in July for the first rise in two months following a 0.6 percent fall (revised down from a 0.4 percent drop), a 1.4 percent rise in May, a 1.1 percent fall 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 1.9 percent increase (forecasts ranged from a 1.2 percent drop to a 2.0 percent rise).
The ministry maintained its assessment after upgrading it for the second straight month in March, saying retail sales are"on an uptrend." The three-month moving average in seasonally adjusted retail sales rose 0.9 percent in July after dipping 0.1 percent the previous month.
Sales of automobiles rose 8.1 percent on year in July for the 11th straight gain but the pace of increase decelerated from 17.7 percent in June. Improving supply chains and easing chip shortages have been supporting auto production and shipments.
Sales of food and beverages, a category which has the largest share in retail sales, posted their 10th straight rise, up 8.0 percent, after rising 6.9 percent the previous month as suppliers continued raising sales prices to reflect high import and production costs seen earlier.
General merchandise sales at department stores and supermarkets marked the 23rd straight year-over-year gain, up 6.3 percent in July, after rising 4.5 percent in June. Sales of apparel and accessories recorded the first rise in five months amid hot and humid weather, up 3.0 percent, after falling 2.0 percent the previous month, when sales were partly dampened by rain storms.
Sales of fuels rose 2.8 percent on the year in July, also for the first rise in five months after falling 4.1 percent in June, as the government is scaling back its energy subsidies. Overall energy costs have eased in line with softer markets until recently 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 but officials plan to extend the program through year end as gasoline prices have surged in recent weeks.
Demand for medicine and cosmetics remained solid, up 6.8 percent in July, after a 9.4 percent gain in June. Sales of machinery and equipment (largely consumer electronics) marked their first year-over-year rise in five months, up 4.3 percent, following a 4.2 percent drop.
Industry data released last week showed department store sales marked the 17th straight year-over-year rise in July, up 8.6 percent, following increases of 7.0 percent in June, 6.3 percent in May, 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 July 2019, sales last month were down a modest 1.5 percent, showing a steady improvement from sharper drops seen earlier.
The Japan Department Stores Association noted that the prolonged heat wave supported demand for summer clothing and other seasonal goods while sales of luxurious brand name products were also solid. Family events as well as anime and food exhibits attracted shoppers, it said.
The weak yen and widely relaxed Covid border rules continued pushing up spending by foreign visitors, up 206.6 percent on the year. It was now 11.4 percent above the level seen in July 2019, overcoming the drag from the pandemic, after falling just 0.8 percent in June from four years earlier.
Market Consensus Before Announcement
Japanese retail sales are expected to post their 17th straight year-over-year increase in July, up a solid 5.8 percent versus a downwardly revised 5.6 percent rise in June, as improved supply chains are supporting vehicle demand and an influx of visitors from overseas is boosting department store sales. Elevated prices for food and beverages are also pushing up sales values while mitigating the impact of the recent fall in fuel costs and sluggish appliances sales. On the month, overall sales are seen rebounding sharply by 1.9 percent after a downwardly revised 0.6 percent dip.
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.
