By Max Sato
(MaceNews) – Japan’s household spending posted the third straight year-on-year drop in October but the pace of decline decelerated from September as the government lifted its Covid-19 state of emergency restrictions on Oct. 1, data released Tuesday by the Ministry of Internal Affairs and Communications showed.
The number of new Covid-19 cases has shown a marked decline in Japan, where the ratio of fully vaccinated people to the total population has exceeded those in most of Europe and North America.
The key points from the monthly Family Income and Expenditure Survey on Households:
- Real average spending by households with two or more people dipped 0.6 on year, as expected. The pace of decline decelerated from 1.9% in September and 3.0 percent in August, when the Delta variant caused a spike in new coronavirus cases.
- The decrease in October was led by lower spending on durable goods (tables, sofas and washing machines) as initial strong demand for furniture and appliances for working from home has waned. Households on average spent less on eating out, holiday tours and hotels but the pace of year-on-year declines decelerated from September as municipalities gradually eased strict rules on business hours, public events and gatherings.
- Expenditures on takeout and frozen food continued growing from a year earlier, reflecting the Covid stay-at-home lifestyle.
- On the month, real average household spending rose a seasonally adjusted 3.4%, posting the second straight gain after jumping 5.0% in September. The pace of increase was firmer than the median economist forecast of a 2.8% rise.
- The average real income of households with salaried workers rose 0.4% on year in October, posting the third straight gain, but the pace of increase slowed from 2.5% in September and 5.4% in August. The weakness through July was caused by a plunge in “special income,” compared to 2020, when many individuals received a one-time cash handout worth Y100,000 (about $880) from the government as part of its stimulus measures.
- The main bread-earner’s income in the average household marked the seventh consecutive year-on year gain on year in October, up 3.1% (vs. +4.7% in September), while the average spouse income posted the second straight drop, down 2.6% (vs. -0.1% the previous month).
Wage Growth Remains Weak
The gradual pickup in nominal wages continues in Japan but real wages remain weak amid rising prices for energy and food, data released Tuesday by the Ministry of Health, Labour and Welfare showed.
Total monthly average cash earnings per regular employee in Japan edged up 0.2% on year in October after rising 0.2% in September. It was the eighth straight year-on-year gain, recovering gradually from a pandemic-triggered slump in 2020, when nominal wages dipped 1.2% after falling 0.4% in 2019.
In real terms, average wages fell 0.7% in October after falling 0.6% in September and rising 0.1% in August.
Base wages dipped 0.2% on year in October, posting the first drop in 10 months after being unchanged in the previous two months and rising 0.2% in July. The key indicator for overall wages has been on a modest recovery trend.
Many Japanese firms tend to maintain employment during an economic downturn, and this trend has been in place even during the pandemic, which means they don’t have to jack up wages to secure workers as the economy reopens.
Contact this reporter: max@macenews.com
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