By Max Sato
(MaceNews) – Japan’s household spending in November posted a modest rise from a year earlier, up for the second straight month, as the effects of a sales tax hike in October 2019 had faded, but consumption marked the first month-on-month decline in four months in light of rising new cases of the coronavirus, data released Friday by the Ministry of Internal Affairs and Communications showed.
Despite surging pandemic cases, the government remains reluctant to impose a strict lockdown for fear of hurting the already weak economic growth, but critics are calling for more drastic measures necessary to slow the spread of the deadly virus, saying the failure to do so would undermine efforts to support economic recovery.
The key points from the monthly Family Income and Expenditure Survey on
Households:
* Real average spending by households with two or more people rose 1.1% on year in November after climbing 1.9% in October, which was the first year-on-year rise in 13 months. The key indicator of consumption came in stronger than the median economist forecast of a 1.2% drop.
* The surprise increase was led by higher telecommunications charges and water utility bills as well as purchases of automobiles and meat (beef and pork). Many households are trying to stay safe by cooking more at home and avoiding eating out. As seen in recent months, expenditures on domestic tours and dining out continued falling due to restricted activity during the pandemic.
* The government program launched in July to support the pandemic-hit the tourism industry with hefty hotel and transport discounts has been a key factor behind falling consumer prices, resulting in lower values of some spending. Critics have blamed the program for causing a spike in coronavirus cases. The government has suspended the campaign and this week declared a state of emergency for Tokyo and three surrounding prefectures, basically asking bars and restaurants to close by 8 p.m. and telling people to stay home as much as they can.
* On the month, real average household spending fell 1.8% in November, the first m/m drop in four months after +2.1% in October, indicating more cautious spending patterns.
* The average real income of households with salaried workers recorded the 11th consecutive year-on-year increase, up 0.6% but the pace of increase decelerated from +2.5% in October.
* Industry data released last month showed that domestic department store sales plunged 14.3% in November for the 14th month of year-on-year decline as more people, particularly seniors, tried to avoid contact in the wake of a spike in new coronavirus cases in the latter half of the month. The rate of decrease was faster than -1.7% in October but slower than -33.6% in September. Demand for jewelry, brand-name watches and other high-end items was strong as the base-year impact of the sales tax hike had disappeared in October. Spending on food and year-end gifts (some for business purposes) was also solid.
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Contact this reporter: max@macenews.com.
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