Japanese retail sales picked up to a 3.1% rise on year in March (vs. consensus +3.0%) from a revised 1.4% in February, led by solid demand for clothing, drugs/cosmetics, appliances (heaters, etc.) and a rebound in auto sales, which more than offset the recent slump in department store sales amid bad weather. Overall sales had slowed sharply in February, when snow storms hampered shopping and the year-on-year performance paled in comparison to the 8.3% leap-year surge in February 2024.

On the month, retail sales posted a 1.2% drop (consensus -1.0%) following a 0.4% gain in February, a sharp 1.2% rebound in January and a 0.2% dip in December.

The Ministry of Economy, Trade and Industry maintained its assessment after upgrading it for the first time in eight months in the February report, saying retail sales are on a gradual pickup trend. In the previous five months, sales had been taking one step forward and one step back.

Japanese retail sales are forecast to have picked up to a solid 3.0% rise on the year in March after they slowed sharply from a 4.4% jump in January to a 1.4% hop in February, when snow storms hampered physical shopping and the year-on-year performance paled in comparison to the 8.3% leap-year surge in February 2024. The nature and other factors were not so kind to the retail sector in March, either. Erratic weather patterns dampened demand for spring clothing and the firmer yen and stricter duty-free shopping rules dented spending by visitors from overseas at department store chains. Overall sales were propped up by stable but elevated gasoline prices in the face of reduced government subsidies.

On the month, retail sales are expected to post their first decline in three months, down 1.0%, following a 0.4% gain in February, a sharp 1.2% rebound in January and a 0.2% dip in December.

Last month, the Ministry of Economy, Trade and Industry upgraded its assessment for the first time in eight months, saying retail sales are “on a gradual pickup trend.” In the previous five months, sales had been “taking one step forward and one step back.”

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.

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.