–METI Keeps View: Retail Sales on Gradual Uptrend; 3-Month Moving Average Still Up on Month
–Department Store Sales on Recovery Track, Auto Sales Improving Further
–Demand for Cosmetics, Drugs Remains Solid; Sales of Appliances Stay Sluggish
By Max Sato
(MaceNews) – Japanese retail sales posted their 14th straight year-over-year increase in April amid a continued pickup in department store and new vehicle sales, but the pace of increase decelerated for two months in a row as clothing and appliances sales slumped and fuel prices eased, data released Wednesday by the Ministry of Economy, Trade and Industry showed.
After solid first-quarter growth, Japan’s economy in the April-June quarter is expected to be propped up by resilient consumer spending and business investment despite global uncertainties. The focus is on how households will cope with elevated costs for daily necessities in fiscal 2023 that began in April, when large firms on average are raising wages at the fastest pace in 30 years to secure workers.
The key points from the METI’s Current Survey of Commerce:
* Retail sales rose a preliminary 5.0% on the year in April for the 14th straight year-over-year rise after rising 6.9% (revised down from a 7.2% rise) in March and
7.3% in February. The increase was lower than the median economist forecast of a 7.3% rise (forecasts ranged from 5.6% to 8.4% gains). The 7.3% rise in February is the fastest since the 8.3% increase in May 2021.
* On the month, retail sales unexpectedly plunged 1.2% on a seasonally adjusted basis in April for the first drop in five months after rising 0.3% (revised down from a 0.6% gain) and 2.1% in February. It was weaker than the median forecast of a 0.8% rise (forecasts ranged from a 0.6% drop to a 1.0% rise).
* The ministry maintained its assessment after upgrading it for the second straight time in March, saying retail sales are “on an uptrend.” Previously, it had said retail sales were “on a gradual uptrend.” It noted that the three-month moving average in seasonally adjusted retail sales rose 0.5% in April for the 10th straight rise after rising 1.0% the previous month.
* General merchandise sales at department stores and supermarkets marked the 14th straight year-over-year gain, up 6.9% in April, following a 5.4% rise in March. Sales of apparel and accessories recorded the second straight drop, down 1.3%, after slipping 0.5% the previous month.
* Sales of fuels fell 3.3% on the year in April after falling 2.7% in March and rising just 0.2% in February. Energy prices have eased after a spike last year while the government has been trying to cap retail gasoline price markups by providing subsidies to refineries.
* Demand for medicine and cosmetics remained solid, up 7.0% in April, after a 10.1% gain in March. By contrast, sales of machinery and equipment (largely consumer electronics) marked their second straight year-over-year drop, down 6.9%, following a 3.9% drop.
Department Store Sales Recovering
Industry data released last week showed department store sales marked the 14th straight year-over-year rise in April, up 9.6%, after showing larger gains of 9.8% in March, 20.4% in February and 15.1% in January. Compared to the pre-pandemic April 2019, sales last month were down 6.3%, showing some improvement from sharper drops seen earlier.
The Japan Department Stores Association noted that sales of clothing and personal goods were supported by eased public health rules while demand for luxurious brand name products remained strong. The relatively weak yen and relaxed Covid border rules continued to boost spending by foreign visitors, up 209.9% on the year, but it remained 40.0% below the level seen in April 2019.