| Consensus | Consensus Range | Actual | Previous | |
| Month over Month | 0.4% | -0.5% to 2.0% | 1.6% | -1.3% |
| Year over Year | -1.6% | -2.7% to -0.3% | -0.5% | -2.9% |
Highlights
Japan's real average household spending continues to show a sluggish tone, marking a fifth straight year-on-year decline, down 0.5% in April, after a 2.9% slip in March, amid falling real wages for many workers. The decrease was led by declines in private university tuition fees and money sent to children studying away from home as well as lower electricity bills due to subsidies. It was partly offset by auto purchases, home repairs and maintenance and solid demand for air conditioners.
Autos and related items, a widely fluctuating category, pushed up overall spending by 1.42 percentage points after trimming overall expenditures by 2.82 points in March. Excluding home maintenance and repairs and other volatile items like vehicles and gift money, the core measure fell a sharper 2.0% (down 0.5% in nominal terms) in April after falling 1.3% (up a nominal 0.3%) in the prior month.
Overall, consumers have been cautious about spending beyond necessities amid slow recovery in real wages, trimming expenditures on eating out and gift money at weddings while they have paid higher medical and dental bills in recent months. Inflation is also hurting households. In the April report, spending on food rose 2.9% on year in nominal terms but dipped 0.6% after adjusted for inflation, led by lower purchases of grains, vegetables and sea weed. There is also a widespread move to switch to more affordable mobile communications plans.
On the supply side, official data released last week showed that retail sales posted a solid 2.1% rise on year in April, propped up by continued demand for clothing and luxury goods at department stores, the recent pickup in vehicle purchases, and strong drugs/cosmetics sales, offsetting the effects of falling fuel prices caused by subsides aimed at alleviating the drag from the Mideast conflict.
Department store sales posted the fourth straight year-on-year increase in April, up 5.2%, after rising 3.2% in March, led by solid demand for spring clothing and high-end watches and jewelries. Sales to visitors from overseas marked their second straight year-on-year gain as the yen remained weak, pushing up their purchasing power. Some Chinese tourists continued boycotting Japan over bilateral diplomatic rows but the pace of decline in sales to customers from China eased to about 2% in April from 20% previously while spending by visitors from Taiwan, South Korea and Southeast Asia more than offset the decrease.
Details:
Japan Apr real household spending -0.5% y/y (Mar -2.9%), 5th straight fall; median forecast -1.6% (range: -2.7% to -0.3%)
Japan Apr real household spending s/a +1.6% m/m (Mar -1.3%), 1st rise in 2 months; median forecast +0.4% (range: -0.5% to +2.0%)
Japan Apr real core household spending (ex-housing, vehicles, gift money) -2.0% y/y vs. -1.3% in Mar when overall spending fell 2.9%
Japan Apr household spending y/y fall led by private university tuition fees, money sent to children studying away from home
Japan Apr data shows households still cautious, trimming spending on clothing, gift money; nominal spending on food up but down in real terms
Japan Apr average real household income +2.3% y/y (Mar +4.7%); +3.8% in nominal terms (Mar +6.4%)
Japan Apr household spending y/y fall partly offset by solid demand for air conditioners, volatile factors of vehicles, home repairs
Market Consensus Before Announcement
War in the Middle East is increasingly affecting consumer sentiment and seen to be leading to a fifth straight month of declines in annual Japanese real household spending in April.
Average household expenditure for two or more people is seen falling 1.6 percent on the year in April after slipping 2.9 percent in March. On a month-on-month basis, household spending is expected to rise 0.4 percent in April after falling 1.3 percent in March.
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.