| Consensus | Consensus Range | Actual | Previous | |
|---|---|---|---|---|
| Month over Month | 0.1% | -0.9% to 0.3% | -1.2% | 1.2% |
| Year over Year | 0.5% | -0.8% to 1.2% | 0.5% | -1.2% |
Highlights
Japan's real household spending posted the first year-over-year increase in 14 months, up a modest 0.5 percent on year in April, as expected, after falling 1.2 percent in March, led by higher university and high school tuition fees and the costs for studying away from home as well as more gift money given at weddings and funerals.
On the downside, vehicle purchases fell in April as the impact of suspended production at Toyota group firms over a safety test scandal continued even though output and shipments resumed in March. The weak yen is also discouraging people from buying overseas package tours while demand for domestic tours has waned after subsidies for hotels and transportation aimed at supporting the tourism industry was phased out. People shed spending on fresh vegetables due to high prices.
On the month, real average expenditures by households with two or more people slumped a seasonally adjusted 1.2 percent for the first decline in three months, giving up the 1.2 percent increase in March. It was much weaker than the median forecast of a slight 0.1 percent rise (forecasts ranged from a 0.9 percent drop to a 0.3 percent gain).
The core measure of real average household spending (excluding housing, motor vehicles and remittance), a key indicator used in GDP calculation, was unchanged on the year in April after dropping 2.0 percent in March. The underlying trend remains: Consumers are seeking lower prices for goods and services including a wide range of discount mobile phone communications plans.
Econoday's Relative Performance Index stands at minus 9, below zero, which indicates the Japanese economy is performing slightly worse than expected. Excluding the impact of inflation, the RPI is at minus 18.
The average real income of households with salaried workers posted the 19th straight year-over-year drop, down 0.6 percent, but income was up 2.3 percent in nominal terms, following a slight 0.1 percent drop in March (up a nominal 3.0 percent). A higher pace of wage hikes among large corporations appears to be spreading to some smaller firms amid tight labor conditions.
The main bread-earner's real income in the average household marked the 16th straight year-over-year drop, down 0.3 percent (up a nominal 2.6 percent), while the average spouse real income was up 6.0 percent (up a nominal 9.1 percent) for the third increase in a row after marking the first rise in 10 months in February.
The gradual pickup in nominal wages in Japan continued for more than two years in April while real wages fell on the year for two years, data released earlier showed.
Total monthly average cash earnings per regular employee in Japan posted their 28th straight year-on-year rise, up a preliminary 2.1 percent in April, accelerating sharply from a 1.0 percent rise in March and posting the largest gain since 2.3 percent in June 2023. The increase was led by higher base wage growth and a slight gain in special pay after two months of decline. Base wages rose 2.3 on year, marking the 30th straight gain, after rising a revised 1.7 percent in March. Firms are raising wages to secure workers amid widespread labor shortages.
In real terms, however, average wages fell a preliminary 0.7 percent on year for the 25th consecutive drop after falling 2.1 percent (revised up from a 2.5 percent decline) in the previous month. It was the smallest decrease since the 0.6 percent drop in December 2022.
On the downside, vehicle purchases fell in April as the impact of suspended production at Toyota group firms over a safety test scandal continued even though output and shipments resumed in March. The weak yen is also discouraging people from buying overseas package tours while demand for domestic tours has waned after subsidies for hotels and transportation aimed at supporting the tourism industry was phased out. People shed spending on fresh vegetables due to high prices.
On the month, real average expenditures by households with two or more people slumped a seasonally adjusted 1.2 percent for the first decline in three months, giving up the 1.2 percent increase in March. It was much weaker than the median forecast of a slight 0.1 percent rise (forecasts ranged from a 0.9 percent drop to a 0.3 percent gain).
The core measure of real average household spending (excluding housing, motor vehicles and remittance), a key indicator used in GDP calculation, was unchanged on the year in April after dropping 2.0 percent in March. The underlying trend remains: Consumers are seeking lower prices for goods and services including a wide range of discount mobile phone communications plans.
Econoday's Relative Performance Index stands at minus 9, below zero, which indicates the Japanese economy is performing slightly worse than expected. Excluding the impact of inflation, the RPI is at minus 18.
The average real income of households with salaried workers posted the 19th straight year-over-year drop, down 0.6 percent, but income was up 2.3 percent in nominal terms, following a slight 0.1 percent drop in March (up a nominal 3.0 percent). A higher pace of wage hikes among large corporations appears to be spreading to some smaller firms amid tight labor conditions.
The main bread-earner's real income in the average household marked the 16th straight year-over-year drop, down 0.3 percent (up a nominal 2.6 percent), while the average spouse real income was up 6.0 percent (up a nominal 9.1 percent) for the third increase in a row after marking the first rise in 10 months in February.
The gradual pickup in nominal wages in Japan continued for more than two years in April while real wages fell on the year for two years, data released earlier showed.
Total monthly average cash earnings per regular employee in Japan posted their 28th straight year-on-year rise, up a preliminary 2.1 percent in April, accelerating sharply from a 1.0 percent rise in March and posting the largest gain since 2.3 percent in June 2023. The increase was led by higher base wage growth and a slight gain in special pay after two months of decline. Base wages rose 2.3 on year, marking the 30th straight gain, after rising a revised 1.7 percent in March. Firms are raising wages to secure workers amid widespread labor shortages.
In real terms, however, average wages fell a preliminary 0.7 percent on year for the 25th consecutive drop after falling 2.1 percent (revised up from a 2.5 percent decline) in the previous month. It was the smallest decrease since the 0.6 percent drop in December 2022.
Market Consensus Before Announcement
Japan's real household spending is forecast to post its first year-over-year increase in 14 months in April, up a slight 0.5 percent (some project a continued decline), thanks to a high pace of wage hikes by major firms. It would follow a smaller-than-expected 1.2 percent drop in March, which was caused by lower electricity bills for February's mild weather and waning pent-up demand for traveling. Consumers remain cautious amid elevated costs for food and an expected rise in utilities while resumed vehicle production and shipments in March after suspension for nearly two months should support automobile purchases going forward.
On the month, real average expenditures by households with two or more people are forecast to be nearly flat, up a seasonally adjusted 0.1 percent, for a third straight increase after recording a stronger-than-expected 1.2 percent gain in March backed by solid demand for formal wear for graduation and entrance ceremonies.
On the month, real average expenditures by households with two or more people are forecast to be nearly flat, up a seasonally adjusted 0.1 percent, for a third straight increase after recording a stronger-than-expected 1.2 percent gain in March backed by solid demand for formal wear for graduation and entrance ceremonies.
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.
