By Max Sato
(MaceNews) – Japan’s household spending continued posting a sharp gain from a year-earlier in May in reaction to the pandemic-triggered 2020 slump, but slipped from April as the government urged people to stay home and called for shorter business hours, data released Tuesday by the Ministry of Internal Affairs and Communications showed.
In response to a resurgence in coronavirus infections, the government in May tightened restrictions on economic activity in a state of emergency for 10 prefectures, ranging from Tokyo in the east and Osaka in the west to Hokkaido in the north and Okinawa in the southwestern tip of Japan.
Following a slump in the January-March quarter from the previous three-month period, household spending in April-June and beyond appears sluggish as the official request for restrictions has been extended until the end of June.
Last month, the government eased some restrictions on economic activity in Tokyo and other prefectures, but decided to retain slightly less strict COVID-19 emergency measures until July 11. News reports Tuesday said the government is likely to extend the restrictions for another month.
The key points from the monthly Family Income and Expenditure Survey on Households:
- Real average spending by households with two or more people jumped 11.6% on year in May, posting the third straight y/y gain after surging 13.0% in April. The key indicator of private consumption in GDP data came in firmer than the median economist forecast of an 10.9% rise.
- The increase was led by higher spending on automobiles, gasoline (higher energy prices), accommodations, gym memberships (slowly reopening), eating out (Japanese food, sushi), medical treatment and massage therapy, all compared to a year earlier, when many people practiced strict social-distancing.
- On the other hand, expenditures on meats, dairy products and durable health goods fell from year-earlier levels, when many households cooked more at home and stocked up on hygiene and personal care products during the first wave of the pandemic.
- On the month, real average household spending slipped a seasonally adjusted 2.1% in May, marking the first m/m drop in four months after +0.1% in April and +7.2% in March, but the pace of decline was slower than the median economist forecast of a 3.7% decrease.
- The average real income of households with salaried workers fell 2.6% on year in May, marking the first y/y drop in two months after rising 2.8% in April and falling 1.0% in March. This is due to sharp declines in public pension payouts and special income during the month, and also in reaction to a large 9.8% gain in overall income in May 2020.
- On the upside, the main bread-earner’s income in the average household marked the second consecutive y/y gain, up 3.0%, in reaction to low levels seen last year. In May, the average spouse income also rose for the second month in a row, up 1.4%.
Average Wages Picking Up
The gradual pickup in wages continued in May in payback for weak base wages and sharp cuts in overtime pay during much of 2020, preliminary data released Tuesday by the Ministry of Health, Labour and Welfare showed.
Total monthly average cash earnings per regular employee in Japan rose 1.9% on year in May after rising 1.4% in April. It was the third straight year-on-year gain.
In real terms, average wages climbed 2.0% in May, the fourth consecutive y/y rise after +1.9% the previous month, in light of a continued slight decline in consumer prices.
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Contact this reporter: max@macenews.com.
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