By Max Sato
(MaceNews) – Japan’s household spending plunged in August as people were cautious about shopping or traveling amid the fifth wave of pandemic that was causing hospital bed shortages in major cities, data released Friday by the Ministry of Internal Affairs and Communications showed.
Heavy rains from mid-August caused damage and disrupted traffic in many regions while the government expanded the areas under strict Covid restrictions in the month.
The key points from the monthly Family Income and Expenditure Survey on Households:
- Real average spending by households with two or more people slumped 3.0% on year after rising 0.7% in July and slipping 4.3% in June. The key indicator of consumption came in weaker than the median economist forecast of a 1.5% drop.
- The year-on-year decrease in August was led by lower spending on eating out, miscellaneous items (handbags, accessories), durable goods (refrigerators, tables and sofas) as well as women’s clothing. By contrast, expenditures on takeout food continued growing during the pandemic.
- On the month, real average household spending plunged a seasonally adjusted 3.9%, marking the fourth consecutive decline after dipping 0.9%. The pace of decrease was sharper than the median economist forecast of a 2.0% drop.
- The average real income of households with salaried workers rose 5.4% on year in August, posting the first gain in four months after falling 2.2% in July and slumping 10.8% in June. The recent weakness was caused by a plunge in “special income,” compared to May and June 2020, when many individuals received a one-time cash handout worth Y100,000 (about $900) from the government as part of its stimulus measures.
- The main breadwinner’s income in the average household marked the fifth consecutive gain on year in August, up 8.5% (vs. +7.9% in July). The average spouse income also rose for the fifth month in a row, up 0.4% (vs. +5.7% the previous month).
Wage Growth Continues in August
The pickup in wages continued in August, backed by higher base wages and special pay, preliminary data released Friday by the Ministry of Health, Labour and Welfare showed.
Total monthly average cash earnings per regular employee in Japan rose 0.7% on year in August after rising a revised 0.6% in July. It was the sixth straight year-on-year gain, recovering gradually from a pandemic-triggered slump in 2020, when nominal wages dipped 1.2% vs. -0.4% in 2019.
In real terms, average wages climbed 0.2% in August after rising a revised 0.3% in July, remaining sluggish.
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Contact this reporter: max@macenews.com
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