By Max Sato
— Feb’s Sharp Drop Also In Reaction To Leap-Year Booster Effect on Feb 2020
(MaceNews) – Japan’s household spending remained below year-earlier levels for the third straight month in February as the government maintained restrictions on economic activity in major cities to fight the pandemic, data released Tuesday by the Ministry of Internal Affairs and Communications showed.
But the ministry noted that the sharp decrease in February was also due to the higher spending in February 2020, which was pushed up by the leap-year effect.
Expenditures on traveling and eating out were particularly weak as the government extended a state of emergency in Tokyo and nine other prefectures for another month until early March, urging people to stay home as much as possible and asking bars and restaurants to close by 8 p.m.
Spending on some services was expected to remain depressed in March as the government again extended its request for restrictions in Tokyo and three surrounding prefectures until March 21, while lifting emergency measures for six other jurisdictions.
However, some outlets defied the official call and remained open until later in the evenings, causing concern that Japan would be hit by a fourth wave of new coronavirus cases.
The key points from the monthly Family Income and Expenditure Survey on
Households:
- Real average spending by households with two or more people slumped 6.6% on year in February after falling 6.1% in January, posting the third consecutive y/y drop. The key indicator of consumption came in weaker than the median economist forecast of a 5.3% drop. The basic spending pattern was largely unchanged, more on goods and less on services.
- The February figure would be a milder 4.3% drop if the leap-year effect on February 2020 (there were 29 days, instead of 28 days for this year) was excluded from the data, the ministry estimates.
- The decline was led by lower spending on leisure traveling, dining out, automobiles and gasoline. Households also trimmed spending on durable goods (including electric appliances) for the first time in five months. Expenditures on and food (sushi bento, frozen food) were solid as some people continued telecommuting and cooking more at home during the pandemic. Spending on mobile communications was up due to calendar factors (January 2021 bill payments were carried over into February as Jan. 31 fell on a Sunday and February 2020 bills were paid in March 2020).
- On the month, real average household spending rose a seasonally adjusted 2.4% in February after plunging 7.3% in January, marking the first m/m gain in two months.
- The average real income of households with salaried workers was nearly flat, up 0.1% on year in February, marking the first year-on-year rise in three months after falling 2.5% in January. The recent trend showed a continued decline in main bread-earner’s income in the average household that began at the peak of the initial wave of the pandemic in May 2020. In February, the spouse’s income also slumped, marking the first y/y decline in 17 months.
Wages Data Show Signs of A Modest Pickup
The decline in average wages in Japan that began in April 2020 eased in February, while base wages, the key indicator for overall cash earnings, picked up slightly, preliminary data released Tuesday by the Ministry of Health, Labour and Welfare showed.
Total monthly average cash earnings per regular employee in Japan dipped just 0.2% on year in February after slumping 1.3% (revised down from the initial reading of a 0.8% drop) in January and plunging 3.0% in December. It was the 11th straight year-on-year decline but the smallest drop during the current downcycle. Companies continued curtailing overtime hours and part-time positions during the pandemic.
In real terms, average wages gained 0.2% in February, the first y/y rise in 12 months after dropping a revised 0.6% the previous month.
Base wages rose 0.4% on year in February, the second straight gain, after rising 0.2% (revised from +0.3%) in January. The key indicator for overall wages has been on a modest recovery trend.
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Contact this reporter: max@macenews.com.
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