–METI Keeps View: Retail Sales on Gradual Uptrend
–Demand for Cosmetics, Drugs Remains Solid; Sales of Appliances Stay Sluggish
By Max Sato
(MaceNews) – Japanese retail sales posted their 16th straight year-over-year increase in June, thanks to strong demand for automobiles amid improving supply chains, recovering department stores and higher prices for food and beverages, mitigating the impact of falling fuel costs and sluggish appliances sales, data released Monday by the Ministry of Economy, Trade and Industry showed.
The key points from the METI’s Current Survey of Commerce:
* Retail sales rose a preliminary 5.9% on the year in June for the 16th straight year-over-year rise after rising 5.8% (revised up from a 5.7% rise) in May, 5.1% in April, 6.9% in March and 7.3% in February. The increase was higher than the median economist forecast of a 5.5% rise (forecasts ranged from 4.2% to 7.0% gains). The 7.3% rise in February remains the fastest since the 8.3% increase in May 2021.
* On the month, retail sales fell 0.4% on a seasonally adjusted basis in June for the first drop in two months following a 1.4% (revised from 1.3%) rise in May, a 1.1% fall in April and increases of 0.3% in March and 2.1% in February. It was slightly firmer than the median forecast of a 0.6% decrease (forecasts ranged from 0.9% to 0.3% drops).
* In the April-June quarter, retail sales gained 0.6% from January-March, when they were up 2.4%.
* The ministry maintained its assessment after upgrading it for the second straight month in March, saying retail sales are “on an uptrend.” The three-month moving average in seasonally adjusted retail sales was flat in June after rising 0.2% the previous month.
* Sales of food and beverages, a category which has the largest share in retail sales, posted their ninth straight rise, up 6.8%, after rising 6.4% the previous month as suppliers continued raising sales prices to reflect high import and production costs seen earlier.
* General merchandise sales at department stores and supermarkets marked the 22nd straight year-over-year gain, up 4.6% in June, after rising 3.9% in May, 6.9% in April and 5.4% in March. Sales of apparel and accessories recorded the fourth straight drop, down 1.4%, after falling 3.7% the previous month.
* Sales of fuels fell 3.9% on the year in June after falling 1.7% in May, 2.9% in April, 2.7% in March and rising just 0.2% in February. Energy prices have generally eased after a spike last year while the government has been trying to cap retail gasoline price markups by providing subsidies to refineries. The process of phasing out the subsidy program began in June and is scheduled to end in September.
* Demand for medicine and cosmetics remained solid, up 9.5% in June, after a 10.5% gain in June. By contrast, sales of machinery and equipment (largely consumer electronics) marked their fourth straight year-over-year drop, down 3.6%, following a 5.3% drop.
Department Store Sales Continue Recovering
Industry data released last week showed department store sales marked the 16th straight year-over-year rise in June, up 7.0%, following increases of 6.3% in May, 9.6% in April, 9.8% in March, 20.4% in February and 15.1% in January. Compared to the pre-pandemic June 2019, sales last month were down 5.1%, showing a steady improvement from sharper drops seen earlier.
The Japan Department Stores Association noted that sales of clothing and cosmetics led the solid overall gain amid higher temperatures and pent-up demand for traveling in the second half of the month after rain storms slowed activity in the first half.
The relatively weak yen and relaxed Covid border rules continued to boost spending by foreign visitors, up 320.3% on the year. It was just 0.8% below the level seen in June 2019, indicating inbound demand has recovered close to the pre-pandemic level.