Japan's real household spending posted a fourth straight decline in November, down a slight 0.4% on year (more or less in line with the consensus call of -0.6%), as consumers remain frugal amid high costs for food and other necessities and a resumed drop in real wages. The decrease was caused by waning demand for air conditioners, washers and golf fees as cold weather replaced the unusually long heat wave. It was partly offset by gains in volatile factors of home repairs/maintenance and university tuition fees as well as a continued rise in eating out (drinks, sushi).

The core measure of real average household spending (excluding housing, motor vehicles and remittance), a key indicator used in GDP calculation, marked a sharper 1.9% slump on the year after slipping a real 1.1% the previous month, when the overall spending fell 1.3%

On the month, real average expenditures by households with two or more people rose 0.4% (vs. consensus -0.9%) after surging 2.9% in October and slumping 1.3% in September.

The average real income of households with salaried workers rose 0.7% in November after rebounding 1.1% in October from a 1.6% dip, which was the first decrease in five months. The average real income of the primary bread earners was up 1.3% for the second straight gain after edging up 0.2% the previous month while their spouses' average income marked the 10th increase in a row, up 4.3%, following a 0.1% gain.

In nominal terms, the average household income grew 4.1% following increases of 3.7% in October, 1.3% in September and 5.6% in August.

In another set of data, total monthly average cash earnings per regular employee in Japan posted their 35th straight year-on-year rise, up a nominal 3.0% in November, after rising a 2.2% rise (revised down from 2.6%) in October. Base wages rose 2.7% on year, up from a downwardly revised 2.5% gain the previous month. However, real average wages slipped 0.3% for the fourth consecutive drop following a short-lived slight pickup that lasted for only two months. To calculate real wages, the labor ministry uses the overall consumer price index minus the historically subdued owners' equivalent rent, which rose a steep 3.4% on year.

Japan's real household spending is forecast to post a fourth straight drop in November, down 0.6% on year, as flat growth in real wages amid elevated costs for food and other daily necessities left consumers frugal, but the pace of decline is seen decelerating from the 1.3% drop in October. Lower temperatures replaced the lingering warm weather, boosting demand for autumn and winter clothing.

On the month, real average expenditures by households with two or more people are expected to fall 0.9% after surging 2.9% in October and slumping 1.3% in September.

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.

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.