— Decline in Covid Cases Leads People To Resume Commuting, Traveling
— But Shift to More Activity Fails to Offset Lower Spending on Utilities
By Max Sato
(MaceNews) – Japan’s household expenditures unexpectedly slipped in November from both the previous year and month as a decline in Covid cases prompted more people to travel and resume commuting to work, which resulted in less spending on utilities at home, data released Friday by the Ministry of Internal Affairs and Communications showed.
The gradual reopening of the economy after the government eased Covid restrictions on Oct. 1 led to higher spending on train fares and highway tolls while demand for takeout food remained strong. But these factors were not strong enough to offset the latest trend: Households spent less on fresh food to cook at home but still remained cautious about eating out.
The key points from the monthly Family Income and Expenditure Survey on Households:
- Real average spending by households with two or more people fell 1.3% on year in November, marking the fourth straight year-on-year drop after a 0.6% fall in October. It was much weaker than the median economist call for a 1.6% rise. The pace of decline was slower than -1.9% in September and -3.0 percent in August, when the Delta variant caused a spike in new coronavirus cases.
- On the month, real average household spending dipped a seasonally adjusted 1.2%, posting the first decline in three months after rising 3.4% in October and surging 5.0% in September. It was also weaker than the median economist forecast of a 1.2% rise.
- Real household spending excluding housing, automobiles, gift money, and other volatile items showed a modest 0.6% drop on the month on a seasonally adjusted basis in November, the first drop in three months after 2.3% in October. The ministry maintained its view that spending is “flat,” instead of downgrading it to say it is turning weaker. “It is too early to judge that the flat trend has changed,” a ministry official told Mace News.
- The average real income of households with salaried workers rose 1.1% on year in November, posting the fourth straight gain, with the pace of increase faster than 0.4% in October but slower than 2.5% in September.
- The main bread-earner’s income in the average household marked the eighth consecutive year-on year gain on year in November, up 3.2% (vs. +3.1% in October), while the average spouse income posted the third straight drop, down 0.5% (vs. -2.6% the previous month).
Average Wages Flat in November
The pickup in nominal wages remains slow in Japan while real wages posted a sharper drop in November as the prices for food and energy continued to rise, data released Friday by the Ministry of Health, Labour and Welfare showed.
Total monthly average cash earnings per regular employee in Japan was unchanged on year in November after rising 0.2% in the previous two months, ending eight straight months of year-on-year gains.
In real terms, average wages plunged 1.7% in November, posting the third straight year-on-year drop after falling 0.7% in October.
Base wages rebounded 0.3% on year in November, marking the first gain in four months after falling 0.2% in October and being flat in the prior two months. The key indicator for overall wages has been on a modest recovery trend.
Many Japanese firms tend to maintain employment during an economic downturn, and this trend has been in place even during the pandemic, which means they don’t have to jack up wages to secure workers as the economy reopens.