Growth in household spending in Japan in May slows from the previous month
- Household spending in May increases 11.6% yoy vs f’cast 10.9%
- Household spending down 2.1% m / m in May vs f’cast -3.7%
- Spending growth slows after April’s 13.0% yoy jump
TOKYO, July 6 (Reuters) – Japanese household spending rose at a double-digit rate in May as consumers bought cars and cellphones, although the pace of growth slowed from the previous month as a new wave of COVID-19 infections has weighed on consumers. trust.
Japan’s economy is struggling to shake off the coronavirus pandemic after the government implemented “near-emergency” measures in Tokyo and other major areas to curb a resurgence in infections.
Household spending rose 11.6% year-on-year in May, the third month of growth, after rising 13.0% in April, government data showed on Tuesday. It was stronger than a median market forecast for a gain of 10.9% in a Reuters poll.
But the gains were heavily skewed by the pullback effect of last year’s plunge, when the pandemic and a nationwide state of emergency shut down businesses and disrupted daily life.
Excluding big-ticket items like housing, cars and gifts, household spending rose 8.9% year-on-year, but down 6.5% from the same month two years earlier – a sign that recovery takes time to fall asleep.
“It will be difficult for service spending to recover if the brakes on economic activity are not completely lifted,” said Takumi Tsunoda, senior economist at the Shinkin Central Bank Research Institute.
“As the roll-out of the vaccine is progressing faster than expected, its (economic) impact may not be visible until September or later. “
The monthly figures showed a contraction of 2.1% from an expected drop of 3.7%, according to data from the Ministry of the Interior and Communications.
While spending in May fell less than expected from the previous month, weak car sales in June – in part due to the supply impact of a semiconductor shortage – is expected to weigh on spending last month, Tsunoda said.
Spending growth in May is unlikely to allay concerns that Japan is lagging behind recoveries in other major economies such as the United States, which the International Monetary Fund projects to grow by 7.0% this year – the fastest pace in a generation. Read more
The combination of the risk of another spike in infections and a late vaccination campaign in the country has shaken consumer and business confidence.
Separate data released on Tuesday showed that real inflation-adjusted wages in May posted the biggest year-over-year increase since June 2018, in part due to an annual increase in overtime pay .
Some analysts fear that the Japanese economy could fall back into recession in the second quarter, defined as two consecutive quarters of contraction, as consumer and business confidence has been hit by measures to stem an increase in coronavirus infections. Read more
On Monday, a survey of private companies showed that activity in Japan’s service sector contracted for the 17th consecutive month in June. Read more
Reporting by Daniel Leussink; Editing by Kim Coghill and Kenneth Maxwell
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