| Consensus | Consensus Range | Actual | Previous | Revised | |
| Month over Month | 0.3% | 0.1% to 1.0% | 1.6% | 0.3% | 0.0% |
| Year over Year | 1.1% | 0.4% to 1.5% | 1.7% | 0.5% | 0.2% |
Highlights
Japanese retail sales rose 1.7% on year (consensus +1.1%) in October for a second straight increase after edging up a downwardly revised 0.2% in September as demand for drugs and cosmetics remains strong and auto sales saw a rebound. Lower temperatures towards the end of the month failed to prop up clothing sales on a METI retail sales data basis. Fuel prices have been sliding, limiting overall sales growth.
Industry data showed department store sales rose 4.3% for the third straight y/y gain in October, driven by high demand for sweaters and overcoats amid the cold weather as well as lingering strength in sales of cosmetics, watches and jewelry. Spending by visitors from overseas as measured by duty-free sales also marked its first rise in eight months, aided by the week-long National Day holidays in China and the weak yen. The general merchandise category in retail sales data, however, marked its ninth year-on-year dip as it includes sales at both department store chains and supermarkets.
Takeaway: This supply-side data points to resilient but sluggish consumption, hit by a combination of sticky inflation around 3% and lagging wage growth, and indicates the demand-side data, October household spending due Dec. 5 will also show only a modest real gain of 1.6% on year, slowing from 1.8% in September, and 2.3% in August and a recent peak of a 4.7% jump in May.
The Ministry of Economy, Trade and Industry maintained its assessment, saying retail sales have a weak undertone. Last month, it revised down its view for the first time in four months. It was the second downgrade this year.
Details:
Japan Oct retail sales +1.7% y/y (Sept revised down to +0.2% from +0.5%); second straight rise; median forecast +1.1% (range: +0.4% to +1.5%)
Japan Oct retail sales +1.6% m/m (Sept revised down to 0.0% from +0.3%); median forecast +0.3% (range: +0.1% to +1.0%)
Japan METI keeps view after last month's downgrade: retail sales have weak undertone
Japan Oct retail sales y/y rise led by drugs/cosmetics, auto, department sales
Market Consensus Before Announcement
Japanese retail sales are forecast to have risen 1.1% on year for a second straight increase after edging up a downwardly revised 0.2% in September as demand for drugs and cosmetics remains strong and cooler weather appears to have supported clothing sales. On the downside, fuel prices have been sliding and demand for vehicles remains sluggish, limiting overall retail sales growth.
The supply side data posted its first drop in 41 months (-0.9%) in August, when the dangerously hot and humid weather kept many people inside homes and offices during the day.
Industry data due on Tuesday, Nov. 25 was expected to show that department store sales recorded a third straight year-on-year increase in October, backed by demand for autumn and winter clothing. The “general merchandise” category in retail sales data, however, marked its eighth year-on-year decline in September (-2.2%) as it includes sales at both department store chains and supermarkets.
On the month, retail sales are expected to show a 0.3% rise on a seasonally adjusted basis after being flat (revised down from an initial 0.3% gain) in September and falling for two months.
Last month, the Ministry of Economy, Trade and Industry downgraded its assessment for the first time in four months, saying retail sales “have a weak undertone.” Previously, it had said sales were “taking one step forward and one step back.”
Definition
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.
Description
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.