–Eating Out Continues; Demand for Winter Clothing, Heaters Picks Up as Cold Weather Replaces Prolonged Heat Wave
–Real Household Income Posts 14th Straight Y/Y Drop on Elevated Costs
By Max Sato
(MaceNews) – Japan’s real household spending posted its ninth straight drop on the year in November, down a larger-than-expected 2.9%, after a 2.5% dip in October, as high costs for food and other daily necessities prompted many to remain frugal and partly because home maintenance and repairs as well as vehicle purchases — both volatile factors — declined after rising the previous month, data released Tuesday by the Ministry of Internal Affairs and Communications showed.
On the month, expenditures slumped 1.0%, much weaker than expected, after dipping 0.1% in October and rising 0.3% in September. Lower temperatures generally supported demand for winter clothing and heaters while pent-up demand for eating out and traveling had already slowed down.
The widespread move among consumers to switch to discount mobile phone plans remains in place while the pandemic-era necessity to simplify weddings and funerals continued to push down the costs for ceremonies.
The key points from the monthly Family Income and Expenditure Survey on Households:
* Real average spending by households with two or more people slumped 2.9% on the year in November after falling 2.5% in October. Spending last rose in February 2023, when it rebounded 1.6% on a 0.3% dip in January. It was weaker than the median economist forecast of a 2.3% fall (forecasts ranged from 2.5% to 1.8% drops). The decline was led by lower spending on home maintenance and repairs as well as vehicles in reaction to solid gains seen in the prior month. Spending on those items tend to fluctuate widely from month to month.
* The decrease was also due to lower costs for mobile communications and lower spending on postage for New Year’s cards in a shift toward sending seasonal greetings by social media.
* The core measure of real average household spending (excluding housing, motor vehicles and remittance), a key indicator used in GDP calculation, fell 0.9% on the year in November, much smaller than the 2.9% drop in overall spending, after falling 3.6% in October (down 2.5% overall). “The overall assessment of household spending is unchanged that it is being flat,” a ministry official told Mace News.
* Compared to the previous month, real average household spending fell a seasonally adjusted 1.0% in November after falling 0.1% in October, rising 0.3% in September and surging 3.9% in August. The latest figure was weaker than the consensus forecast of a 0.3% rise (forecasts ranged from a 0.1% drop to a 0.4% gain).
* Many households continued spending less on groceries and prepared food, compared to the earlier phase of the pandemic, when they had cooked more at home and bought takeout food to avoid close contact. They are also being frugal as food costs remain high.
* On the upside, households continued spending on eating out and traveling, thanks to widely eased Covid restrictions. Demand for winter clothing and heaters picked up in November after the prolonged warm weather hurt sales of autumn clothing in the previous few months. Purchases of automobiles rose on year from August to October, thanks to improved supply chains and eased semiconductor shortages.
* The average real income of households with salaried workers posted the 14th straight year-over-year drop, down 4.7% in November (down 1.6 in nominal terms) after falling 5.2% October (down a nominal 1.5%). The main bread-earner’s real income in the average household marked the 11th straight year-over-year drop while the average spouse real income posted the seventh straight drop after recording the first decline in 16 months in May 2023.
The monthly labor survey by the Ministry of Health, Labour and Welfare due on Wednesday is expected to show the pickup in nominal wages in Japan continued for nearly two years in November, keeping an above 1% rise after a 1.5% increase in October, while real wages fell on year for the 20th straight month, down about 2% following a 2.3% drop in October.
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