–METI Keeps View: Retail Sales Taking One Step Forward, One Step Back
By Max Sato
(MaceNews) – Japanese retail sales rose a weaker-than-expected 1.2% on year in March as solid department store sales and elevated food and beverage prices continued mitigating the impact of suspended vehicle output, but the pace of increase slowed from an upwardly revised 4.7% gain in February, which was partly boosted by leap year effects, data released Friday by the Ministry of Economy, Trade and Industry showed. The consensus forecast was a 2.8% rise.
Strong inbound spending and high demand for luxury brand goods continued to boost department store sales while lower temperatures in the first half of the month dampened spring clothing sales.
On the month, retail sales posted their first drop in three months, falling a seasonally adjusted 1.2%, also weaker than the median forecast of a 0.6% increase, in payback for an upwardly revised 1.7% jump in February.
The METI maintained its assessment, saying retail sales are “taking one step forward and one step back.” The three-month moving average in seasonally adjusted retail sales rose 0.2% on the month in March after rising at the same pace in February and falling in the previous three months.
Details from the METI’s Current Survey of Commerce:
* Retail sales rose a preliminary 1.2% on the year in March for the 25th straight year-over-year rise after rising 4.7% (revised up from 4.6%) in February, 2.1% in January and 2.4% in December. It was lower than the median economist forecast of a 2.8% rise (forecasts ranged from 2.2% to 3.2% 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 fell 1.2% on a seasonally adjusted basis in March, following a solid 1.7% gain (revised up from 1.5%) in February, a slight 0.2% rise in January and a 1.5% drop in December. It was weaker than the median forecast of a 0.6% rise (forecasts ranged from 0.3% to 0.6% gains).
* Sales of automobiles slumped 15.9% on year in March after falling 7.8% in February and marking the first drop in 20 months in January with a 4.0% drop. Sales of machinery and equipment (largely consumer electronics) rose 8.1% in March for the ninth increase in a row after rising 6.3% previously.
* Sales of food and beverages, a category which has the largest share in retail sales, posted their 18th straight rise, up 4.6%, after rising 6.0% 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 25th straight year-over-year gain, up 6.1% in March, after rising 8.3% in February. Sales of apparel and accessories fell 3.8% for the fourth straight drop after falling 3.3% in the previous month.
* Sales of fuels rose 7.3% for the fifth straight year-on-year increase after rising 2.5%. Retail gasoline prices in Japan have stabilized after hitting a record high in early September and slowing down afterwards.
* Demand for medicine and cosmetics remained solid, up 3.9% in March, after an 8.6% gain in February.
Department Store Sales Show Clear Recovery
Industry data released last week showed department store sales marked the 25th straight year-over-year rise in March, up 9.9% at ¥510.9 billion, following increases of 14.0% in February, 7.1% in January and 5.4% in December. Sales last month were also up 2.4% from the pre-pandemic March 2019.
The Japan Department Stores Association said strong inbound spending and high demand for luxury brand goods continued to boost overall sales. Lower temperatures in the first half of the month dampened spring clothing sales but sales of clothing for graduation and entrance ceremonies were solid, it said.
Spending by foreign visitors jumped 148.4% on the year to a record ¥49.5 billion, beating the previous record of ¥47.7 billion hit in December 2023. It was 49.3% above the level seen in March 2019, surpassing the pre-pandemic levels for the ninth straight month.