–METI Keeps View After Downgrade in December Report: Retail Sales Taking One Step Forward, One Step Back
By Max Sato
(MaceNews) – Japanese retail sales rose 4.6% on year in February after a downwardly revised 2.1% gain in January as the weak yen and lunar new year holidays in Asia boosted inbound spending at department stores while mild weather pushed up demand for spring clothing, mitigating the drag from suspended vehicle production, data released Friday by the Ministry of Economy, Trade and Industry showed. The consensus forecast was a 2.8% rise.
On the month, retail sales rose a seasonally adjusted 1.5%, above the median forecast of a 1.1% increase, after a downwardly revised 0.2% in January and plunging 2.6 percent in December.
The METI maintained its assessment after downgrading it for the January report, saying retail sales are “taking one step forward and one step back.” The three-month moving average in seasonally adjusted retail sales rose 0.1% on the month in February after three months of decline.
The key points from the METI’s Current Survey of Commerce:
* Retail sales rose a preliminary 4.6% on the year in February for the 24th straight year-over-year rise after rising 2.1% (revised down from 2.3%) in January, 2.4% in December and 5.4% in November. It was higher than the median economist forecast of a 2.8% rise (forecasts ranged from 2.1% to 4.5% gains). The pace of increase is below the recent peak of a 7.3% rise in February 2023, which is the highest since the 8.3% increase in May 2021.
* On the month, retail sales rose a solid 1.5% on a seasonally adjusted basis in February, following a slight 0.2% rise (revised down from 0.8%) in January, a 1.5% drop in December and a 0.4% rebound in November. It was higher than the median forecast of a 1.1% rise (forecasts ranged from a -0.0% drop to a 1.5% gain).
* Sales of automobiles fell 8.6% on year in February after marking the first drop in 20 months in January with a 4.0% drop and rising 5.1% in December. Sales of machinery and equipment (largely consumer electronics) rose 5.4% in February for the eighth increase in a row after rising 1.5% previously.
* Sales of food and beverages, a category which has the largest share in retail sales, posted their 17th straight rise, up 5.7%, after rising 3.5% the previous month. Food price markups have peaked but the weak yen could keep import costs high.
* General merchandise sales at department stores and supermarkets marked the 24th straight year-over-year gain, up 8.4% in February, after rising 3.4% in January. Sales of apparel and accessories rose 0.7% for the first rise in six months after falling 8.3% the previous month.
* Sales of fuels rose 2.3% on the year in February after rising 1.5% in January. Retail gasoline prices in Japan have stabilized after hitting a record high in early September and slowing down afterwards. The government has scaled back subsides to refineries.
* Demand for medicine and cosmetics remained solid, up 8.6% in February, after a 5.5% gain in January.
Department Store Sales Show Clear Recovery
Industry data released this week showed department store sales marked the 24th straight year-over-year rise in February, up 14.0% at ¥432.9 billion, following increases of 7.1% in January, 5.4% in December and 7.4% in November. Sales last month were also up 6.3% from the pre-pandemic February 2019.
The Japan Department Stores Association said already strong inbound spending was raised by the lunar new year holidays from Feb. 10 to 17 and overall sales were propped up by continued high demand for luxury brand. Higher temperatures in the second half of the month supported spring clothing sales while Valentine’s Day events increased foot traffic, it said.
Spending by foreign visitors soared 171.5% on the year to ¥46.9 billion, the second highest on record after December’s ¥47.7 billion. It was 47.5% above the level seen in February 2018, surpassing the pre-pandemic levels for the eighth straight month.