–METI Repeats Retail Sales Are Flat After Downgrading Its View Last Month
–Department Store Sales Mark 1st Y/Y Drop in 5 Months on Bad Weather, Omicron
–Fuel Sales Up on Rising Energy Prices; Demand for Medicine, Cosmetic Solid
By Max Sato
Global semiconductor shortages continued to delay shipments of vehicles, leaving new car sales down. Sales of machinery and equipment also remained depressed amid supply constraints and waning stay-at-home demand for electric appliances.
The key points from the METI’s Current Survey of Commerce:
* Retail sales fell a preliminary 0.8% on the year in February after rising 1.1% (revised down from 1.6%) in January, coming in weaker than the median economist forecast of a 0.3% drop. It was the first year-on-year drop since September 2021, when sales dipped 0.5%. Automobiles remained weak (down 14.8%) and department store sales showed the first drop in five months (down 1.6%) while sales of fuels continue to be strong (up 21.6%) on rising energy prices and demand for medicine and cosmetics was solid (up 3.2%).
* In January, sales rose on the year because restrictions on economic activity for many of the 47 prefectures were imposed late that month and those were less strict than Covid state of emergency measures adopted a year earlier. The weakness in February is believed to have stemmed from the worst spike in Covid cases during the two-year pandemic. The government maintained public health restrictions until March 21.
* On the month, retail sales also slipped 0.8% on a seasonally adjusted basis in February for the third straight drop after falling 0.9% (revised up from an initial 1.9% fall) in January. The three-month moving average in adjusted sales fell 0.7%, the second straight drop after falling 0.2% the previous month.
* The ministry maintained its view, saying retail sales are “flat” after downgrading it last month from its previous statement that sales were “showing signs of a pickup.”
* Industry data released last week showed department store sales marked the first year-on-year drop in five months in February, down 0.7%, after showing a solid 15.6% rise in January. The Japan Department Stores Association note that continued public health restrictions since January, bad weather and falling consumer sentiment dampened sales despite continued strong demand for luxury goods and robust sales at Valentine’s Day events.