| Consensus | Consensus Range | Actual | Previous | Revised | |
| Month over Month | 1.6% | 0.8% to 1.8% | 2.4% | -4.1% | -3.9% |
| Year over Year | 2.5% | 1.3% to 3.4% | 4.0% | 0.5% | 0.6% |
Highlights
Japanese retail sales rose a stronger-than-expected 4.0% on the year in July (consensus +2.5%) for the fifth straight gain, with the pace of increase picking up from a revised 0.6% in June but slower than the 5.0% rise in May, which was the highest pace since 5.4% in November 2023. Hot weather after the rainy season lifted demand for air conditioners and auto sales revved up while subsidies continued to put a lid on gasoline and diesel prices, leading to no change in fuel sales after a recent downtrend. The increase was widespread. The apparel and accessories category was the only one down, marking its 11th consecutive decline in payback for earlier sharp gains.
The Ministry of Economy, Trade and Industry maintained its assessment after upgrading it in the May report, saying retail sales are “on a gradual uptrend.” Sales rose a seasonally adjusted 2.4% on the month in July after falling a revised 3.9% in June and rising 1.7% in May. It was a seventh increase in 12 months, indicating some resilience amid elevated costs of living. The three-month moving average was unchanged after slipping 0.1% in June and rising 1.6% in May.
Industry data released last week showed department store sales posted their seventh straight year-on-year rise July, with the pace of increase accelerating from 2.3% in June thanks to the heat wave in the second half of the month that boosted sales of cool-touch T-shirts and sun-protection clothing as well as parasols and sandals. There mains strong demand from affluent customers for luxury brand bags and wristwatches. Summer holiday gifts and holidays also supported overall sales.
The weak yen helped sales to visitors from overseas mark their fifth consecutive increase in July, up 25.5%, after a 29.8% rise in June. Tourists from Hong Kong, South Korea and Taiwan led the gain. Spending by shoppers from mainland China rose about 5% after recording its first year-on-year increase in seven months in June, although the number of customers from China was still down 26% as many of them are bypassing Japan at the request of Beijing over bilateral diplomatic rows.
Details:
Japan July retail sales +4.0% y/y (June revised to +0.6% from +0.5%); 5th straight rise; median forecast +2.5% (range: +1.3% to +3.4%)
Japan July retail sales +2.4% m/m (June revised to -3.9% from -4.1%); median forecast +1.6% (range: +0.8% to +1.8%)
Japan METI maintains view: retail sales on uptrend
Japan July retail sales y/y rise led by autos, appliances, department stores, drugs/cosmetics
Market Consensus Before Announcement
Intensifying inflationary pressure is expected to keep Japanese retail sales on an uptrend for a fifth consecutive month in July, with department store and auto sales showing signs of strength despite signs of a slight slowdown in gasoline and other fuel prices.
Retail sales are expected to rise 2.5 percent on the year in July, up from a revised 0.6 percent a month earlier, previously reported as 0.5 percent. The June figure came below expectations as lower temperatures compared with a year earlier dampened sales across a range of categories, including clothing and appliances such as air conditioners. Government subsidies have capped retail prices of gasoline and diesel, exerting downward pressure on fuel sales.
The Ministry of Economy, Trade and Industry maintained its assessment after upgrading it last month, saying retail sales are “on a gradual uptrend.”
On a month-on-month basis, retail sales are projected to rise 1.6 percent in July following a revised 3.9 percent fall in June from the initial 4.1 percent fall.
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.