| Consensus | Consensus Range | Actual | Previous | |
|---|---|---|---|---|
| Month over Month | -0.5% | -1.0% to -0.3% | -1.3% | 2.0% |
| Year over Year | -2.5% | -2.9% to -1.3% | -1.1% | -1.9% |
Highlights
Japan's real household spending posted a smaller-than-expected 1.1% drop on year in September for a second straight decline as consumers remain frugal amid high costs for necessities, but the core measure of real average household spending (excluding housing, motor vehicles and remittance), a key indicator used in GDP calculation, eked out a slight 0.3% gain, following a similarly flat reading (-0.1%) the previous month.
The headline number came in firmer than the median economist forecast of a 2.5% drop and better than the high end of the forecast range (-2.9% to -1.3%). The decline was caused by volatile factors of purchases of vehicles and other released items like navigation systems as well as home maintenance and repairs (plumbing), which had a combined effect of pushing down real spending by 2.33 percentage points. Households continued eating out after the pandemic while school tuition fees (private universities) rose sharply, together lifting overall spending by 1.05 points.
On the month, real average expenditures by households with two or more people slumped 1.3% after rebounding a higher-than-forecast 2.0% in August, recovering from the 1.7% drop in July, when the heat wave had intensified. It was much weaker than the consensus call of a 0.5% dip and worse than the lowest forecast of a 1.0% fall.
In the July-September quarter, real core household spending fell 0.5% on quarter following decreases of 0.3% in April-June and 0.8% in January-March, indicating private consumption remained lackluster in the third quarter.
The median economist forecast for the preliminary Q3 GDP is a slight 0.2% rise on quarter, or an annualized 0.6%, hit by sluggish private consumption and a pullback in business investment. It would mark a sharp slowdown from a 0.7% rebound (annualized 2.9%) in Q2, when consumption and capex picked up. The GDP posted its first contraction in two quarters in Q1, hit by suspended output at Toyota group factories over a safety test scandal that had a widespread impact beyond the auto industry.
The average real income of households with salaried workers fell 1.6% in September for the first year-on-year decline in five months after rising 2.0% in August and 5.5% in July. The average real income of the primary bread earners posted its second consecutive drop, down a sharp 2.5%, while their spouses' average income marked the eighth increase in a row, up a solid 5.1%. In nominal terms, the average household income grew 1.3% following increases of 5.6% in August and 8.1% in July.
Total monthly average cash earnings per regular employee in Japan posted their 33rd straight year-on-year rise, up 2.8% in September, after rising a revised 2.8% in August, data released Thursday from the Ministry of Health, Labour and Welfare showed. Base wages rose 2.6% on year after rising a revised 2.4% the previous month.
In real terms, average wages slipped 0.1% in September after falling a revised 0.8% in August, edging up 0.3% in July and marking the first rise in 27 months in June with a 1.1% gain. To calculate real wages, the ministry uses the overall consumer price index minus the historically subdued owners' equivalent rent, which rose 2.9% on year in September.
The headline number came in firmer than the median economist forecast of a 2.5% drop and better than the high end of the forecast range (-2.9% to -1.3%). The decline was caused by volatile factors of purchases of vehicles and other released items like navigation systems as well as home maintenance and repairs (plumbing), which had a combined effect of pushing down real spending by 2.33 percentage points. Households continued eating out after the pandemic while school tuition fees (private universities) rose sharply, together lifting overall spending by 1.05 points.
On the month, real average expenditures by households with two or more people slumped 1.3% after rebounding a higher-than-forecast 2.0% in August, recovering from the 1.7% drop in July, when the heat wave had intensified. It was much weaker than the consensus call of a 0.5% dip and worse than the lowest forecast of a 1.0% fall.
In the July-September quarter, real core household spending fell 0.5% on quarter following decreases of 0.3% in April-June and 0.8% in January-March, indicating private consumption remained lackluster in the third quarter.
The median economist forecast for the preliminary Q3 GDP is a slight 0.2% rise on quarter, or an annualized 0.6%, hit by sluggish private consumption and a pullback in business investment. It would mark a sharp slowdown from a 0.7% rebound (annualized 2.9%) in Q2, when consumption and capex picked up. The GDP posted its first contraction in two quarters in Q1, hit by suspended output at Toyota group factories over a safety test scandal that had a widespread impact beyond the auto industry.
The average real income of households with salaried workers fell 1.6% in September for the first year-on-year decline in five months after rising 2.0% in August and 5.5% in July. The average real income of the primary bread earners posted its second consecutive drop, down a sharp 2.5%, while their spouses' average income marked the eighth increase in a row, up a solid 5.1%. In nominal terms, the average household income grew 1.3% following increases of 5.6% in August and 8.1% in July.
Total monthly average cash earnings per regular employee in Japan posted their 33rd straight year-on-year rise, up 2.8% in September, after rising a revised 2.8% in August, data released Thursday from the Ministry of Health, Labour and Welfare showed. Base wages rose 2.6% on year after rising a revised 2.4% the previous month.
In real terms, average wages slipped 0.1% in September after falling a revised 0.8% in August, edging up 0.3% in July and marking the first rise in 27 months in June with a 1.1% gain. To calculate real wages, the ministry uses the overall consumer price index minus the historically subdued owners' equivalent rent, which rose 2.9% on year in September.
Market Consensus Before Announcement
Japan's real household spending is forecast to slump 2.5% on year in September after posting a smaller-than-expected 1.9% drop in August and edging up 0.1% in July as consumers remain frugal in the face of high costs for necessities including short-supplied rice. The protracted heat wave also dampened demand for autumn clothing and other seasonal goods.
On the month, real average expenditures by households with two or more people are expected to slip 0.5% after rebounding a higher-than-forecast 2.0% in August, recovering from the 1.7% drop in July, when the heat wave had intensified. There may be a pullback after many households in August rushed to stock up water, food, medicine, toilet paper and flashlights among other emergency goods in preparation for earthquakes and typhoons.
The focus is on real core spending (excluding housing, motor vehicles and remittance) in the July-September quarter, a key indicator used to estimate private consumption in the Q3 GDP data (due Nov. 15), following a 0.3% drop on quarter in April-June.
The median economist forecast for the preliminary Q3 GDP is a slight 0.2% rise on quarter, or an annualized 0.6%, hit by sluggish private consumption and a pullback in business investment. It would mark a sharp slowdown from a 0.7% rebound (annualized 2.9%) in Q2, when consumption and capex picked up. The GDP posted its first contraction in two quarters in Q1, hit by suspended output at Toyota group factories over a safety test scandal that had a widespread impact beyond the auto industry.
On the month, real average expenditures by households with two or more people are expected to slip 0.5% after rebounding a higher-than-forecast 2.0% in August, recovering from the 1.7% drop in July, when the heat wave had intensified. There may be a pullback after many households in August rushed to stock up water, food, medicine, toilet paper and flashlights among other emergency goods in preparation for earthquakes and typhoons.
The focus is on real core spending (excluding housing, motor vehicles and remittance) in the July-September quarter, a key indicator used to estimate private consumption in the Q3 GDP data (due Nov. 15), following a 0.3% drop on quarter in April-June.
The median economist forecast for the preliminary Q3 GDP is a slight 0.2% rise on quarter, or an annualized 0.6%, hit by sluggish private consumption and a pullback in business investment. It would mark a sharp slowdown from a 0.7% rebound (annualized 2.9%) in Q2, when consumption and capex picked up. The GDP posted its first contraction in two quarters in Q1, hit by suspended output at Toyota group factories over a safety test scandal that had a widespread impact beyond the auto industry.
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.
