–METI Upgrades View: Retail Sales Picking Up Gradually Vs. Showing Signs of Pickup
–Department Store Sales Surge; Summer Clothing Up on Heat Wave
–High Fuel Costs Prop Up Retail Sales; Supply Delays Keep Auto Sales Down
By Max Sato
(MaceNews) – Japanese retail sales posted the third straight rise in May both on the year and month as eased Covid rules drew more people to physical stores and sweltering weather in many regions boosted demand for summer clothing, data released Wednesday by the Ministry of Economy, Trade and Industry showed.
High fuel prices and a jump in department store sales also helped offset a continued decline in motor vehicle sales amid supply shortages while sales of machinery and equipment were hit by logistical bottlenecks that have been exacerbated by Covid lockdowns in Chinese cities.
Looking ahead, sales for June are expected to be supported by continuing demand for summer clothing and beverages as the heat wave has become more intense, ending Japan’s rainy season about three weeks earlier than usual in many areas.
The severe summer weather is boosting sales of air conditioners and electric fans but also causing serious cases of heat stroke and may discourage people from going outside. Power companies are urging households and businesses to cut electricity use to avoid a blackout and some cities are facing water shortages, which could slow economic activity.
The key points from the METI’s Current Survey of Commerce:
* Retail sales rose a preliminary 3.6% on the year in May after rising 3.1% (revised up from a 2.9% rise) in April and 0.7% in March. The increase was lower than the median economist forecast of a 4.0% rise but it was the largest gain since an 8.3% rise in May 2021. Sales fell 0.9% n February, when the Omicron variant caused the worst spike in Covid cases during the pandemic. As the vaccination rates rise and the numbers of new infections fell, the government eased public health restrictions in late March.
* Sales of automobiles marked the ninth straight year-on-year drop, down 10.1% in May after falling 7.5% in April and 6.3% in March.
* Department store sales marked the third straight gain, up a sharp 20.7% in May after an 8.0% rise in April, while sales of apparel and accessories posted the second consecutive rise, up 11.8%, following a 9.7% rise in April and a 7.2% fall in March.
* Sales of fuels remained elevated, up 15.0% in May, following year-on-year increases of 13.8% in April, 15.5% in March and 21.0% in February. The government has been trying to cap retail gasoline price markups by providing subsidies to refineries.
* Demand for medicine and cosmetics remained solid, up 5.0% on the year in May, marking the 13th straight increase, after rising 3.0% in April. Sales of machinery and equipment (consumer electronics) slipped 3.3% in May after marking first year-on-year gain in six months in April, up 0.8%, and falling 3.3% in March.
* On the month, retail sales rose 0.6% on a seasonally adjusted basis in May after rising 1.0% (revised up from a 0.8% rise) in April and jumping 1.7% in March, which was the first rise in four months after falling 0.9% in February. The three-month moving average in adjusted sales rose 1.1% on the month in May after rising a revised 0.6% in April and being flat in March.
* The ministry upgraded its view for the second straight month, saying retail sales are “picking up gradually,” compared to its previous statement that they were “showing signs of a pickup.” It last downgraded its assessment in February (for January data).
Industry data released last week showed department store sales marked the third straight year-on-year rise in May, with a 57.8% jump led by improving consumer sentiment and strong demand for summer clothing, after increases of 19.0% in April and 4.6% in March.
The Japan Department Stores Association said the recovery trend has become clearer, thanks to the easing of Covid restrictions, noting the decline in sales compared to pre-pandemic months in 2019 slowed to a 10.5% drop in May from a 13.8% decrease in April. Events during the Golden Week holidays from late April to early May, the first without strict Covid rules in three years, drew many visitors. People also rushed to buy watches, jewelry, food and furniture before planned markups as the weaker yen is pushing up import costs and materials prices continue soaring, the association said.