| Consensus | Consensus Range | Actual | Previous | |
| Month over Month | 2.3% | -0.9% to 3.9% | 1.5% | -2.5% |
| Year over Year | -0.8% | -2.9% to 0.5% | -1.8% | -1.0% |
Highlights
Japan's real average household spending remained sluggish in February, down a deeper-than-expected 1.8% on year, after having unexpectedly posted a second straight drop in January (-1.0%). It was largely in line with the recent trend as measured by the three-month moving average (-1.9% vs. -0.4% previously). Consumers remain cautious amid falling real wages, trimming spending even on foodstuffs in the month. The move to switch to more affordable mobile communications plans also continues.
The impact of the Mideast conflict has been largely limited as the government continues to suppress energy price hikes with subsidies to refineries and electric power suppliers. This helped households lower their average spending on utilities by 5.5% in nominal terms compared to a year earlier. When adjusted for inflation (total CPI minus owners' equivalent rent = 1.4% y/y), real spending on that key category was flat in February.
In the utilities category, electricity bills rose 2.6% (down a nominal 5.6%) in February but this was offset by other charges, most notably costs for heating oil used in kerosene heaters that plunged 16.8% (-19.7% in nominal terms).
On the month, real average expenditures by households with two or more people marked their first gain in three months, up a softer-than-expected but still solid 1.5%, after diving 2.5% in January.
Details:
Japan Feb real household spending -1.8% y/y (Jan -1.0%), 3rd straight fall; median forecast -0.8% (range: -2.9% to +0.5%)
Japan Feb real household spending s/a +1.5% m/m (Jan -2.5%), 1st rise in 3 months; median forecast +2.3% (range: -0.9% to +3.9%)
Japan Feb real core household spending (ex-housing, vehicles, gift money) -2.3% y/y vs. -0.4% in Jan when overall spending fell 1.0%
Japan Feb household spending y/y fall led by private university tuition fees, funerals, autos
Japan Feb average real household income +1.6% y/y (Jan +1.3%); +3.0% in nominal terms (Jan +3.0%)
Japan Feb data shows higher spending on overseas tour packages, dental treatment, spring clothing
Market Consensus Before Announcement
Japan’s real household spending is expected to fall year over year for a third consecutive month in February amid signs of a broad slowdown in department store and supermarket sales, as well as declines in new passenger car registrations. The trend is underscored by February retail sales data, which posted the first year-over-year decline in two months.
Consumers remain cautious as real wages continue to fall. Recent spending trends suggest households are simplifying ceremonies and cutting back on weddings and funerals, while prioritizing food and other daily necessities. There is also a widespread shift toward more affordable mobile communication plans.
Household spending in February is expected to fall 0.8 percent from a year earlier after a 1.0 percent decline in January. The January drop was driven by a 10th consecutive year-on-year decline in both gift-related spending and mobile communication charges, as well as volatility in private university tuition fees.
Still, household spending is expected to rise for the first time in three months, increasing 2.3 percent month-on-month in February after slipping 2.5 percent in January.
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.