By Chikafumi Hodo
TOKYO (MaceNews) – Japan’s household spending rose 4.7% in real terms in May from a year earlier, marking the first increase in two months and sharply beating market expectations. The reading reversed a 0.1% decline in April and outpaced the median forecast of a 1.1% gain.
The stronger-than-expected recovery was paced by increased spending on automobiles with auto sales lifted by payback for production disruptions in early 2024 due to safety scandal-related output suspensions at Toyota. The official also noted that auto purchases are a volatile factor in household spending data.
Spending on dining out also remained strong. Eating out continues to be on an uptrend, following its recovery from the pandemic slump, the official added.
On a seasonally adjusted basis, household spending rose 4.6% from April, snapping a two-month decline and sharply exceeding the consensus estimate of a 0.3% gain.
Core household spending-which excludes housing, vehicles, and gift money-rose 2.5% year-on-year, rebounding from a 0.1% decline in April. The surge in May household spending was also supported by a rebound in durable goods. The unseasonal heat wave boosted purchases of air conditioners by 45.6% on the year after falling 23.3% the previous month and slipping 12.6% in May 2024.
Meanwhile, average real household income edged up 0.4% in May, after remaining flat in April. In nominal terms, income rose 4.4%, slightly above the previous month’s 4.1% gain.