–Spending Posts 1st Y/Y Drop in 3 Months as People Cook Less at Home
–January-March Spending Dips Q/Q, Hit by Omicron-led Spike in Covid Cases
By Max Sato
(MaceNews) – Japan’s real household spending posted the first month-on-month rise in three months in March as the government eased public health restrictions and the weather improved from February, but spending dipped on the year as people remained cautious about dining out and demand for cooking at home was stronger a year before under a Covid state of emergency, data released Tuesday by the Ministry of Internal Affairs and Communications showed.
In the first quarter of 2022, household spending marked the first quarter-on-quarter drop in two quarters as the government urged most prefectures to adopt strict anti-Covid measures short of a state of emergency for about two months until March 21.
Private consumption in the January-March quarter gross domestic product data, due May 18, is forecast by economists to have slumped 0.5% on quarter, leading to an estimated 0.4% quarter-on-quarter (1.7% annualized) contraction in the Q1 real GDP. The economy grew 1.1% on quarter, or an annualized 4.6% in Q4.
The key points from the monthly Family Income and Expenditure Survey on Households:
* Real average spending by households with two or more people fell 2.3% on the year in March, coming in firmer than the median economist forecast of a 2.8% drop. It was the seventh year-on-year decrease in the past 12 months, following a 1.1% rise in February and a 6.9% surge in January, which was the first rise in six months. The recent gains were partly in reaction to sharp decreases seen in the first two months of 2021.
* The decrease in March was led by lower spending on utilities (water and gas) and groceries as the prices for fish and vegetables continued surging from year-earlier levels amid global supply constraints and demand for cooking at home was stronger a year before when economic and social activities were more restricted under the Covid state of emergency. Spending on eating out, particularly at bars, continued to be sluggish. By contrast, expenditures on domestic packaged tours and hotels were up on the year in the wake of eased Covid restrictions while spending on takeout food remained strong.
* On the month, real average household spending rebounded a seasonally adjusted 4.1% in March for the first rise in three months and the fifth gain in the past 12 months, after slumping 2.8% in February, falling 1.2% in January and edging up 0.2% in December. It was stronger than the consensus forecast of a 2.6% rise. “The lifting of the Covid measures led to a 4.1% rise on the month but we will continue monitoring the impact of the pandemic,” a ministry official said.
* In the January-March quarter, real household spending fell 1.8% on quarter amid the Omicron-led spike in new coronavirus cases, after rebounding 5.2% (revised up from a 4.5% rise) in October-December and slumping 4.7% in July-September, when the Delta variant led to restrictions. From a year earlier spending rose 1.8% in the first quarter in reaction to a 1.9% drop in Q1 2021.
* The average real income of households with salaried workers rose 2.3% on year in March, posting the first rise in two months, following a 0.1% fall in February and a 1.6% rise in January, while the average income rose at a faster pace of 3.8% in nominal terms. The national average core consumer price index (excluding fresh food) rose 0.8% from a year earlier in March and the total CPI gained at a faster pace of 1.2%, both for the seventh straight year-on-year increase.
* The main bread-earner’s real income in the average household marked the 12th consecutive year-on year gain in March, up 2.2%, after increases of 0.4% in February and 1.9% in January, while the average spouse income posted the second straight rise, up a real 3.7%, after rising 1.2% in February and falling 3.8% in January.
Average Wages on Gradual Uptrend but Down in Real Terms
The pickup in nominal wages in Japan remained intact in March while real wages slipped amid surging costs of daily necessities, data released Tuesday by the Ministry of Health, Labour and Welfare showed.
Total monthly average cash earnings per regular employee in Japan posted the third straight year-on-year rise, up a preliminary 1.2% in March after rising at the same pace in February. In real terms, average wages fell 0.2% on year after being unchanged in February and rising 0.5% in January.
Base wages rose 0.5% on year in March, marking the fifth straight gain after rising 0.8% in February. The key indicator for overall wages has been on a modest recovery trend in the past year.