By Max Sato
(MaceNews) – Japan’s household spending posted a sharper-than-expected drop in January as the government called for restricted economic activity to slow the spread of the pandemic, data released Friday by the Ministry of Internal Affairs and Communications showed.
Expenditures on eating out and traveling are estimated to have remained weak for the rest of the first quarter as the government last month extended a state of emergency in Tokyo and nine other prefectures for another month until early March, urging people to stay home as much as possible and asking bars and restaurants to close by 8 p.m.
The government has again extended its request for restrictions in Tokyo and three surrounding prefectures until March 21, while lifting emergency measures for six other jurisdictions.
Some shops defied the official call and remained open until later in the evenings, complaining that government compensation is insufficient for them to stay afloat. News coverage also showed some business and entertainment districts are crowed with people.
But overall, many households have adopted stay-home lifestyles during the pandemic, reducing traveling outside their areas and eating out while spending more on takeout food and groceries as well as home office furniture and electric appliances.
The key points from the monthly Family Income and Expenditure Survey on Households:
- Real average spending by households with two or more people plunged 6.1% on year in January after dipping 0.6% in December and rising 1.1% in November. The key indicator of consumption came in much weaker than the median economist forecast of a 2.2% drop. The basic spending pattern was unchanged, more on goods and less on services, as new coronavirus cases are not decreasing as fast as officials want to see in some big cities.
- The January decline was led by lower spending on dining out and leisure traveling. Expenditures on automobiles (for a safer mode of transportation), electric appliances (washers, heat pumps) and food (meat, frozen food) remained solid as some people continued telecommuting and cooking more at home during the pandemic.
- On the month, real average household spending slumped a seasonally adjusted 7.3% in January after rising 0.2% (revised down from +0.9%) in December, marking the first m/m drop in two months.
- The average real income of households with salaried workers dropped 2.5% on year in January, posting the second straight year-on-year decrease after slipping 1.3% in December.
Wages Data Also Point To Weakness
Average wages in Japan remained weak in January as the coronavirus has triggered layoffs and bankruptcies, while base wages, the key indicator for overall cash earnings, showed a modest gain, preliminary data released Tuesday by the Ministry of Health, Labour and Welfare showed.
Total monthly average cash earnings per regular employee in Japan slipped 0.8% on year in January, posting the 10th straight year-on-year decline, as companies have been curtailing overtime hours and part-time positions during the pandemic. The pace of decrease decelerated from -3.0% in December and -1.8% in November.
In real terms, average wages edged down 0.1% for the 11th consecutive y/y drop after -1.7% in December.
Base wages rose 0.3% on year in January, the first gain in three months, after sliding 0.1% in December. The key indicator for overall wages has been on a modest recovery trend.
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Contact this reporter: max@macenews.com.
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