–METI Keeps View: Retail Sales Picking Up; Sales Rebound on Month
–Retail Sales Continue Rising Q/Q in Q4, Annual Pace Accelerates in 2022
–Department Store Sales on Recovery Track, Shrinking Drop from Pre-Pandemic Levels
–Demand for Cosmetics, Drugs Remains Strong; Auto Sales Dip After Recent Pickup
By Max Satp
(MaceNews) – Japanese retail sales posted the 10th straight year-on-year increase in December, with the pace of increase accelerating from November but slowing from over 4% gains seen from August to October, as some people remained cautious about stepping out amid another spike in Covid infections, data released Tuesday by the Ministry of Economy, Trade and Industry showed.
Sales rebounded on the month as colder weather boosted demand for winter clothing and heating oil.
At the start of 2023, credit card records showed personal expenditures on both goods and services had been improving in recent weeks. More people traveled during the year-end and New Year holidays without strict public health restrictions for the first time in three years.
The monthly Economy Watchers Survey, which was conducted by the Cabinet Office from Dec. 25 to Dec. 31 and released on Jan. 12, indicated that confidence was slow to recover. The numbers of Covid infections and deaths are surging again in Japan’s eighth wave of the pandemic.
The key points from the METI’s Current Survey of Commerce:
- Retail sales rose a preliminary 3.8% on the year in December for the 10th straight year-over-year rise after rising 2.5% (revised from 2.6%) in November, 4.4% in October and 4.8% in September. The increase was higher than the median economist forecast of a 3.2% rise (forecasts ranged from 1.4% to 3.6% gains).
- In the final quarter of 2022, retail sales gained 3.6% on quarter after rising 3.7% in July-September, and were up 1.2% for a third straight year-on-year increase after a 1.4% gain in the previous quarter.
- For the whole of calendar 2022, retail sales rose 2.6% on year following a 1.9% rise in 2021 and a 3.2% drop in 2020, showing a continued pickup from the pandemic-caused slump.
- After the initial Omicron variant storm in February 2022, the government eased public health restrictions in March and has continued reopening the economy. It lifted strict its Covid border control in October, leading to a pickup in spending by visitors from other countries.
- Sales of automobiles fell 0.5% in December after rising 6.1% in November, 12.2% in October and 10.2% in September, which was the first year-on-year rise in 13 months, and falling 6.3% in August and posting double-digit percentage drops earlier.
- General merchandise sales at department stores and supermarkets marked the 10th straight year-on-year gain, up 3.9% in December, following increases of 2.9% in November, 6.6% in October and 8.8% in September. Sales of apparel and accessories rebounded a modest 1.0% after falling 8.8% in November, rising 4.6% in October and dipping 2.3% in September, which was the first drop in three months.
- Sales of fuels also rebounded 3.2% on the year in December amid freezing temperatures across the country and record snowfall in some regions, after falling 2.6% in November and rising 1.6% in October and 7.5% in September. The pace of increase had slowed from a recent peak of 28.9% in November 2021. The government is also trying to cap retail gasoline price markups by providing subsidies to refineries.
- Demand for medicine and cosmetics remained strong, up a sharp 16.0% in December for the 20th straight increase, after rising 12.1% in November. Sales of machinery and equipment (largely consumer electronics) fell 3.0% after decreases of 2.9% in November and 1.0% in October and a 3.0% gain in September, which was the first rise in three months.
- On the month, retail sales rose 1.1% on a seasonally adjusted basis in December after marking their first drop in five months in November, down 1.3% (revised down from a 1.1% drop), and rising 0.3% in October and surging 1.5% in September. The latest figure was slightly firmer than the median forecast of a 0.8% gain (forecasts ranged from 0.8% to 1.0% increases).
- The ministry maintained its assessment, saying retail sales are “picking up.” In September, it upgraded its view from the previous statement that sales were “picking up gradually.” It noted that the three-month moving average in seasonally adjusted retail sales edged up 0.1% in December for a fifth straight gain after rising 0.1% the previous month.
Department Store Sales on Recovery Track
Industry data released last week showed department store sales marked the 10th straight year-over-year rise in December, up 4.0%, slowing from increases of 4.5% in November, 11.4% in October, 20.2% in September and 26.1% in August. Sales were down just 2.1% (-3.0% in November) from the pre-pandemic December 2019, when there were remaining dampening effects of the sales tax hike to 10% from 8% in October 2019. Compared to December 2018, last month’s sales were down 7.0% (-8.8% in November).
The Japan Department Stores Association noted that the exceptionally cold weather in December pushed up demand for winter clothing while rising Covid cases discouraged some people from going to physical stores and while demand for luxury brands remained strong. The relatively weak yen and relaxed Covid border rules continued to boost spending by foreign visitors, up 484.7% on the year, accelerating further from the 403.2% jump in November. But it remained below pre-pandemic levels, down 28.9% from December 2019. The pace of decline continued decelerating from 32.9% in November, 46.6% in October and 63.7% in September.
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Contact this reporter: max@macenews.com