| Consensus | Consensus Range | Actual | Previous | |
|---|---|---|---|---|
| Month over Month | -0.8% | -1.9% to 0.1% | 0.3% | 3.9% |
| Year over Year | -3.5% | -4.5% to -2.1% | -2.8% | -2.5% |
Highlights
Key points from family income and expenditure survey on households:
--Japan September household spending posts 7th straight y/y drop as lingering heat wave dents demand for autumn goods, high costs hurt
--Q3 core spending down 0.8 percent q/q for 3rd straight fall, indicating sluggish consumption in Q3 GDP
--Move to discount mobile phone plans continues, pushing down spending
--Eating out, traveling solid; demand for automobiles up on improved supply chains
--Real household income posts 12th straight y/y drop on elevated costs despite nominal wage hikes
Japan's real household spending posted its seventh straight drop on the year in September, down 2.8 percent, slightly worse than a 2.5 percent dip in August, as high costs for daily necessities promoted many to be more frugal and the lingering heat wave damped demand for autumn clothing and other seasonal goods, data released Tuesday by the Ministry of Internal Affairs and Communications showed.
On the month, expenditures edged up 0.3 percent after high demand for summer clothing triggered an above-forecast 3.9 percent rebound in August. Pent-up demand for eating out and traveling appears to have lost some steam.
The widespread move among consumers to switch to discount mobile phone plans remains intact while the pandemic-era necessity to simplify weddings and funerals have pushed down the costs for ceremonies.
Econoday's Relative Performance Index stood at plus 32, above zero, which indicates the Japanese economy is performing better than expected after outperforming with a narrower margin earlier. Excluding the impact of inflation, the RPI was at plus 15.
Both the government and the Bank of Japan have been providing stimulus to help the economy recover from the pandemic-caused slump. The output gap has turned slightly positive after three years of staying in negative territory but it is expected to slip back into negative territory after the third quarte GDP data are released later this month. Nominal wages are expected to grow at a fast pace in the current fiscal year amid labor shortages but real wages remain below year-earlier levels.
Real average spending by households with two or more people fell 2.8 percent on the year in September after falling 2.5 percent in August, 5.0 percent in July, 4.2 percent in June, 4.0 percent in May, 4.4 percent in April, 1.9 percent in March and rebounding 1.6 percent in February on a 0.3 percent dip in January. It was firmer than the median economist forecast of a 3.5 percent fall (forecasts ranged from 4.5 percent to 2.1 percent drops). The decline was led by lower spending on remittance, telecommunications costs and vegetables while expenditures on automobiles (improved supply chains), electricity (prices slumped) and eating out showed solid gains.
The impact of the lingering heat wave was widespread. It dented demand for autumn clothing and sportswear as well as other seasonal goods like bug sprays (the temperatures were so high that even mosquitos were inactive). The unusually hot weather also hurt crops and boosted prices of vegetables, which in turn prompted consumers to trim spending on some fresh food.
In a recurring technical development, spending on electricity fell a nominal 16.6 percent on the year in as utility prices had been lowered by subsidies, but it rose 10.6 percent in real terms as the cost for electricity plunged 24.6 percent on the year in the September CPI data, pushing up the purchasing power for this item. Many households also spent more on electricity in August than in July by using air conditioners at the peak of the summer, which was reflected in the bills paid in September.
The core measure of real average household spending (excluding housing, motor vehicles and remittance), a key indicator used in GDP calculation, fell 3.0 percent on the year in September, compared to the 2.8 percent drop in overall spending, after falling 3.2 percent in July (down 2.5 percent overall).
Core expenditures slipped 0.8 percent on quarter in July-September for the third straight drop after falling 2.4 percent in April-June, slipping 0.4 percent in January-March and rising 0.7 percent in October-December, indicating that private consumption is unlikely to contribute much to total domestic output in the preliminary third quarter GDP data due on Nov. 15.
Japan's economy is forecast by economists to post its first contraction in four quarters in July-September, down a slight 0.2 percent on quarter, or an annualized 0.6 percent, hit by a pullback in net exports after a surge in the previous quarter that was caused by easing import costs and also due to a drop in public works spending. Consumer spending and business investment may show a slight rebound but will likely lack strength.
Compared to the previous month, real average household spending rose a seasonally adjusted 0.3 percent in September after surging 3.9 percent in August, plunging 2.7 percent in July, rebounding a modest 0.9 percent in June and following four months of decline. The latest figure was stronger than the consensus forecast of a 0.8 percent fall (forecasts ranged from a 1.9 drop to a 0.1 percent gain).
The real spending adjusted index (2020 = 100) stood at a six-month high of 100.1 in September after rising to a five-month high of 99.8 in August from 96.1 in July. The index had drifted down from 100.3 in March, 101.1 in February and 103.6 in January (the highest since 104.9 in April 2021). The July figure is the lowest under the current statistical formula dating to January 2020.
The average real income of households with salaried workers posted the 12th straight year-over-year drop, down 5.8 percent in September (down 2.4 percent in nominal terms), after falling 6.9 percent in August (down 3.5 percent in nominal terms) after falling 6.6 percent (down a nominal 3.0 percent) in July. The main bread-earner's real income in the average household marked the ninth straight year-over-year drop while the average spouse real income posted the fifth straight drop after recording the first decline in 16 months in May.
Real Wage Drop Continues; Nominal Base Wages Post Solid Gain
The pickup in nominal wages in Japan continued for nearly two years while real wages fell on the year for the 18th straight month, data released Tuesday by the Ministry of Health, Labour and Welfare showed.
Total monthly average cash earnings per regular employee in Japan posted their 21st straight year-on-year rise, up a preliminary 1.2 percent in September, after rising 0.8 percent (revised down from 1.1 percent) in August, 1.1 percent in July, 2.3 percent in June, 2.9 percent in May and a modest 0.8 percent in April. The recent slower pace was due to a decline in bonuses and other special pay for the second straight month in September as well as no growth in overtime pay in July.
Base wages rose a solid 1.5 percent on year, marking the 23rd straight gain, after rising a revised 1.3 percent in August. The pace of increase has accelerated moderately in recent months from 0.5 percent in March as many firms are raising wages to secure workers. The key indicator for overall wages has been on a recovery trend.
In real terms, average wages fell a preliminary 2.4 percent on year in September for the 18th consecutive drop after falling 2.8 percent (revised down from a 2.5 percent decline), 2.7 percent in July, 1.6 percent in June, 0.9 percent in May and 3.2 percent in April. To calculate real wages, the ministry uses the overall consumer price index minus the structurally weak owners' equivalent rent, which rose 3.6 percent on year in September after rising 3.7 percent in August.
Consumer inflation in Japan eased in all three key measures in September as energy subsidies continued to push down electricity and natural gas utility costs and markups in processed food prices are peaking, data from the Ministry of Internal Affairs and Communication released last month showed.
--Japan September household spending posts 7th straight y/y drop as lingering heat wave dents demand for autumn goods, high costs hurt
--Q3 core spending down 0.8 percent q/q for 3rd straight fall, indicating sluggish consumption in Q3 GDP
--Move to discount mobile phone plans continues, pushing down spending
--Eating out, traveling solid; demand for automobiles up on improved supply chains
--Real household income posts 12th straight y/y drop on elevated costs despite nominal wage hikes
Japan's real household spending posted its seventh straight drop on the year in September, down 2.8 percent, slightly worse than a 2.5 percent dip in August, as high costs for daily necessities promoted many to be more frugal and the lingering heat wave damped demand for autumn clothing and other seasonal goods, data released Tuesday by the Ministry of Internal Affairs and Communications showed.
On the month, expenditures edged up 0.3 percent after high demand for summer clothing triggered an above-forecast 3.9 percent rebound in August. Pent-up demand for eating out and traveling appears to have lost some steam.
The widespread move among consumers to switch to discount mobile phone plans remains intact while the pandemic-era necessity to simplify weddings and funerals have pushed down the costs for ceremonies.
Econoday's Relative Performance Index stood at plus 32, above zero, which indicates the Japanese economy is performing better than expected after outperforming with a narrower margin earlier. Excluding the impact of inflation, the RPI was at plus 15.
Both the government and the Bank of Japan have been providing stimulus to help the economy recover from the pandemic-caused slump. The output gap has turned slightly positive after three years of staying in negative territory but it is expected to slip back into negative territory after the third quarte GDP data are released later this month. Nominal wages are expected to grow at a fast pace in the current fiscal year amid labor shortages but real wages remain below year-earlier levels.
Real average spending by households with two or more people fell 2.8 percent on the year in September after falling 2.5 percent in August, 5.0 percent in July, 4.2 percent in June, 4.0 percent in May, 4.4 percent in April, 1.9 percent in March and rebounding 1.6 percent in February on a 0.3 percent dip in January. It was firmer than the median economist forecast of a 3.5 percent fall (forecasts ranged from 4.5 percent to 2.1 percent drops). The decline was led by lower spending on remittance, telecommunications costs and vegetables while expenditures on automobiles (improved supply chains), electricity (prices slumped) and eating out showed solid gains.
The impact of the lingering heat wave was widespread. It dented demand for autumn clothing and sportswear as well as other seasonal goods like bug sprays (the temperatures were so high that even mosquitos were inactive). The unusually hot weather also hurt crops and boosted prices of vegetables, which in turn prompted consumers to trim spending on some fresh food.
In a recurring technical development, spending on electricity fell a nominal 16.6 percent on the year in as utility prices had been lowered by subsidies, but it rose 10.6 percent in real terms as the cost for electricity plunged 24.6 percent on the year in the September CPI data, pushing up the purchasing power for this item. Many households also spent more on electricity in August than in July by using air conditioners at the peak of the summer, which was reflected in the bills paid in September.
The core measure of real average household spending (excluding housing, motor vehicles and remittance), a key indicator used in GDP calculation, fell 3.0 percent on the year in September, compared to the 2.8 percent drop in overall spending, after falling 3.2 percent in July (down 2.5 percent overall).
Core expenditures slipped 0.8 percent on quarter in July-September for the third straight drop after falling 2.4 percent in April-June, slipping 0.4 percent in January-March and rising 0.7 percent in October-December, indicating that private consumption is unlikely to contribute much to total domestic output in the preliminary third quarter GDP data due on Nov. 15.
Japan's economy is forecast by economists to post its first contraction in four quarters in July-September, down a slight 0.2 percent on quarter, or an annualized 0.6 percent, hit by a pullback in net exports after a surge in the previous quarter that was caused by easing import costs and also due to a drop in public works spending. Consumer spending and business investment may show a slight rebound but will likely lack strength.
Compared to the previous month, real average household spending rose a seasonally adjusted 0.3 percent in September after surging 3.9 percent in August, plunging 2.7 percent in July, rebounding a modest 0.9 percent in June and following four months of decline. The latest figure was stronger than the consensus forecast of a 0.8 percent fall (forecasts ranged from a 1.9 drop to a 0.1 percent gain).
The real spending adjusted index (2020 = 100) stood at a six-month high of 100.1 in September after rising to a five-month high of 99.8 in August from 96.1 in July. The index had drifted down from 100.3 in March, 101.1 in February and 103.6 in January (the highest since 104.9 in April 2021). The July figure is the lowest under the current statistical formula dating to January 2020.
The average real income of households with salaried workers posted the 12th straight year-over-year drop, down 5.8 percent in September (down 2.4 percent in nominal terms), after falling 6.9 percent in August (down 3.5 percent in nominal terms) after falling 6.6 percent (down a nominal 3.0 percent) in July. The main bread-earner's real income in the average household marked the ninth straight year-over-year drop while the average spouse real income posted the fifth straight drop after recording the first decline in 16 months in May.
Real Wage Drop Continues; Nominal Base Wages Post Solid Gain
The pickup in nominal wages in Japan continued for nearly two years while real wages fell on the year for the 18th straight month, data released Tuesday by the Ministry of Health, Labour and Welfare showed.
Total monthly average cash earnings per regular employee in Japan posted their 21st straight year-on-year rise, up a preliminary 1.2 percent in September, after rising 0.8 percent (revised down from 1.1 percent) in August, 1.1 percent in July, 2.3 percent in June, 2.9 percent in May and a modest 0.8 percent in April. The recent slower pace was due to a decline in bonuses and other special pay for the second straight month in September as well as no growth in overtime pay in July.
Base wages rose a solid 1.5 percent on year, marking the 23rd straight gain, after rising a revised 1.3 percent in August. The pace of increase has accelerated moderately in recent months from 0.5 percent in March as many firms are raising wages to secure workers. The key indicator for overall wages has been on a recovery trend.
In real terms, average wages fell a preliminary 2.4 percent on year in September for the 18th consecutive drop after falling 2.8 percent (revised down from a 2.5 percent decline), 2.7 percent in July, 1.6 percent in June, 0.9 percent in May and 3.2 percent in April. To calculate real wages, the ministry uses the overall consumer price index minus the structurally weak owners' equivalent rent, which rose 3.6 percent on year in September after rising 3.7 percent in August.
Consumer inflation in Japan eased in all three key measures in September as energy subsidies continued to push down electricity and natural gas utility costs and markups in processed food prices are peaking, data from the Ministry of Internal Affairs and Communication released last month showed.
Market Consensus Before Announcement
Japan's real household spending is forecast to post its seventh straight drop on the year in September, down 3.5 percent, worsening from a 2.5 percent dip in August, as high costs for daily necessities reduced the appetite for non-essential items and consumers became weary amid the lingering heat wave. On the month, expenditures are seen down 0.8 percent after high demand for summer clothing triggered an above-forecast 3.9 percent rebound in August. Pent-up demand for eating out and traveling appears to have lost some steam.
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.
