–Spending Up Slightly on Year but Posts 2nd Straight Drop on Month
–Ministry Drops ‘Flat’ Reference to Falling Spending; To Watch Covid Impact
By Max Sato
(MaceNews) – Japan’s household spending posted the second straight month-on-month drop in February as the worst spike in Covid cases in the two-year pandemic hit many regions and bad winter weather also discouraged people from going out, data released Tuesday by the Ministry of Internal Affairs and Communications showed.
Household expenditures still marked the second straight year-on-year gain in February, albeit slight, as public health restrictions on economic activity issued in January and lifted in March were less strict than those imposed in early 2021 under a state of emergency.
The outlook for consumption in the April-June quarter remains uncertain after an expected slump in January-March as some cities now see a rebound in the numbers of infections caused by the contagious Omicron variant.
The key points from the monthly Family Income and Expenditure Survey on Households:
* Real average spending by households with two or more people rose 1.1% on the year in February, coming in weaker than the median economist forecast of a 2.7% increase. It was the sixth year-on-year increase in the past 12 months, following 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 increase was led by higher spending on domestic packaged tours, internet connection charges, takeout sushi (including fat rolls for celebrating Setsubun just before the spring in the old calendar) and frozen food as well as heating oil, last of which was due to low temperatures and rising energy prices. By contrast, expenditures on eating out, particularly for sushi and Japanese food, fell from a year earlier amid rising Covid cases, while households continued spending less on groceries (fish and vegetables) in light of a surge in fresh food prices. Demand for cooking at home was stronger a year before under the Covid state of emergency.
* The ministry stopped saying spending was “largely flat” as it posted the second monthly drop in a row. “We will keep a close watch as the spread of the coronavirus is continuing,” a ministry official said.
* On the month, real average household spending slumped a seasonally adjusted 2.8% for the second straight drop and the seventh fall in the past 12 months, after falling 1.2% in January and edging up 0.2% in December. It was much weaker than the consensus forecast of a 1.5% fall.
* The average real income of households with salaried workers dipped 0.1% on year in February, posting the first drop in seven months, following a 1.6% rise in January and 4.6% gain in December, while the average income rose 1.0% in nominal terms. The national average core consumer price index (excluding fresh food) rose 0.6% and the total CPI gained at a faster pace of 0.9% in February, both for the sixth straight year-on-year increase, returning to the recent gradual pickup path after slowing in January.
* The main bread-earner’s real income in the average household marked the 11th consecutive year-on year gain in February, up 0.4% (vs. +1.9% in January), while the average spouse income posted the first rise in two months, up a real 1.2% (vs. -3.8% the previous month).
Average Wages Up Slowly but Flat in Real Terms
The pickup in nominal wages in Japan maintained momentum in February while real wages showed no growth amid gradually rising consumer prices, data released Tuesday by the Ministry of Health, Labour and Welfare showed.
Total monthly average cash earnings per regular employee in Japan rose a preliminary 1.2% on year in February after rising a revised 1.1% in January. In real terms, average wages were unchanged on the year after rising a revised 0.5% in January and slumping 1.3% in December.
Base wages rose 0.9% on year in February, marking the fourth straight gain after rising 0.9% (revised up from +0.4%) in January. The key indicator for overall wages has been on a modest recovery trend in the past year.