–Spending in January Dips Vs. December Amid Omicron-Led Spike in Covid Cases
–Ministry Sees Spending As Largely Flat, To Watch Impact of Restrictions on February
By Max Sato
(MaceNews) – Japan’s household spending slipped back on the month in January, hit by the drag from the Omicron-led spike in Covid cases, but posted the first year-on-year rise in six months as restrictions on economic activity issued in January were less strict than those imposed in early 2021 under a state of emergency, data released Friday by the Ministry of Internal Affairs and Communications showed.
The government resumed restrictions on social and economic activities in 35 of the 47 prefectures in late January and has extended those Covid rules for Tokyo and 17 other jurisdictions until March 21.
In December, the impact of the Omicron variant was not fully felt but new coronavirus cases exploded in the following months as some people lowered their guard to travel during the year-end and new year holidays and workplaces triggered clusters of infections.
The key points from the monthly Family Income and Expenditure Survey on Households:
* Real average spending by households with two or more people surged 6.9% on the year in January in reaction to a 6.0% plunge seen a year earlier. It was the first year-over-year rise in six months after slipping 0.2% in December and falling 1.3% in November. The rebound came in much stronger than the median economist forecast of a 3.4% increase.
* The increase was led by higher spending on dining out, hotels, tour packages, train fares and highway tolls. By contrast, expenditures on utilities and groceries (fish and vegetables) decreased as more people went out or resumed commuting, compared to a year before.
* The ministry maintained its view that spending is “largely flat.” Spending on eating out and snacks gained from a year earlier but households spent less on foodstuffs for cooking at home, leaving the increase in total expenditures on the food category small, a ministry official said. “We need to see the full impact of public health restrictions on February data before making any changes to our view,” he said.
* On the month, real average household spending dipped a seasonally adjusted 1.2% for the first drop in two months after rising 0.2% (revised from a 0.1% gain) in December, falling 0.9% (revised from a 1.2% drop) in November and rising 3.9% (revised from a 3.4% rise) in October. The Ministry conducted an annual update on seasonal adjustments this month.
* The average real income of households with salaried workers rose 1.6% on year in January, posting the sixth straight gain, with the pace of increase decelerating from a 4.6% rise in December.
* The main bread-earner’s income in the average household marked the 10th consecutive year-on year gain on year in January, up 1.9% (vs. +2.1% in December), while the average spouse income posted the first drop in two months, down 3.8% (vs. +3.0% the previous month).
Average Wages Up but Pace Remains Slow
The pickup in nominal wages in Japan accelerated slightly at the start of the year while real wages posted a modest rise, backed by a slower pace of consumer inflation that month, 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 0.9% on year in January after falling a revised 0.4% in December and rising 0.8% in November. In real terms, average wages rose 0.4%, posting the first year-on-year gain in five months after slumping a revised 2.3% the previous month.
Base wages rose 0.4% on year in January, marking the third straight gain after rising 0.1% (revised from +0.2%) in December. The key indicator for overall wages has been on a modest recovery trend.
Consumer prices in Japan posted the fifth straight year-on-year rise in January but the pace of increase decelerated sharply as the 2021 base effects of hotel fee gains over subsidized discounts in 2020 and the first round of markups in property insurance premiums have faded.
At the same time, the costs for daily necessities continue rising in line with rising energy and commodities markets, making the outlook for consumption-led economic recovery uncertain.