Japanese real household spending rose by 1.8 percent in September from a year ago, missing expectations that centered on a 2.6 percent increase. The September increase was the fifth straight month of year-on-year gains and followed a 2.3 percent rise on year in August.

Real household spending slipped by 0.7 percent on the month in September from August, seasonally adjusted, after rising 0.6 percent on the month in August. The September monthly decline was the first in three months, and the decrease exceeded the 0.5 percent decline anticipated in the survey of forecasts.

Japan’s real household spending is forecast to rise 2.6 percent in
September, marking the fifth consecutive month of year-on-year
growth, following a 2.3 percent increase in August. The gain in August was
driven by higher spending on automobiles and robust leisure-related
activities. On month, spending is seem down 0.5 percent in September.

The upward trend in both categories is expected to continue in
September, with car purchases likely to increase as the recent
decline in new passenger car registrations shows signs of easing.
Spending on auto-related items is also projected to rise from a year
earlier, reflecting a continued rebound from the production and
shipment suspensions within the Toyota group amid last year’s
safety scandal.

Spending on recreational activities, such as overseas and domestic
package tours, also rose in real terms from a year earlier, partly due
to a rebound from weak demand in August last year caused by a
typhoon and the issuance of a special Nankai Trough earthquake
alert advisory.

Elsewhere, consumption activity strengthened as nationwide sales
at supermarkets, department stores, and convenience stores
increased in September. The end of the extremely hot and humid
summer supported a gradual recovery in store visits, as record-high
temperatures in summer had kept many people indoors, limiting
outings and consumption.

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.