Japan's real household spending posted an unexpected rebound in November, up a decent 2.9% on year (vs. consensus -1.4%), led mainly by a jump in automobile purchases due to a routine shuffle of household samples, which boosted overall expenditures by 2.77 percentage points. The fact that November this year had 12 days in the weekends and public holidays, up from 10 a year earlier, also lifted spending on refrigerators among other durable goods while cold weather pushed up demand for winter clothing. Some also spent more on wedding dresses and receptions.

On the downside, elevated costs of living have kept consumers frugal in recent years. The November data showed many households continued to trim the funds sent to kids studying away from home and the gift money given at weddings and funerals. There is also a widespread move to switch to more affordable mobile communications plans.

Japan Nov real household spending +2.9% y/y (Oct -3.0%), 1st rise in 2 months; median forecast -1.4% (range: -2.5% to -0.6%)

Japan Nov real household spending s.a. +6.2% m/m (Oct -3.5%), 1st rise in 3 months; median forecast +1.4% (range: +0.4% to +3.3%)

Japan Nov real core household spending (ex-housing, vehicles, gift money) +1.8% y/y vs. -1.5% in Oct when overall spending fell 3.0%

Japan Nov household spending y/y unexpected rise led by autos, refrigerators, miscellaneous (weddings)

Japan Nov average real household income -2.2% y/y (Oct -0.1%); +1.0% in nominal terms (Oct +3.3%)

Japan Nov data shows households still cautious, continuing to cut spending on funds sent to kids studying away from home, gift money, mobile plans

Japan’s real household spending is expected to fall 1.4 percent from a year earlier in November after unexpectedly dropping 3.0 percent the previous month, weighed down by weaker food spending, declines in auto purchases and lower mobile communication fees as households shifted to cheaper plans.

Spending in November is seen declining for a second straight month. Nationwide supermarket sales rose from a year earlier, but because the nationwide consumer price index for goods grew at a faster pace, consumption in volume terms may have declined, potentially weighing on household spending for the month. Department store sales also increased, though growth likely remained below the pace of price gains.

New auto sales, which were a key factor dragging down household spending in October, are also expected to remain sluggish in November, reflecting continued declines in new passenger car registrations.

On a month-on-month basis, household spending is expected to rebound, rising 1.4 percent in November after falling 3.5 percent in the previous month. The monthly increase is seen being supported by firmer sales at department stores and convenience stores during the month.

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.