–METI Keeps View: Retail Sales Picking Up; Sales Dip on Month but 3-Month Moving Average Up
–Department Store Sales Recovery Pace Slows; Below Pre-Pandemic Levels
–Demand for Cosmetics, Drugs Remains Strong; Auto Sales Pickup Slows
By Max Sato
(MaceNews) – Japanese retail sales posted the ninth straight year-on-year increase in November, with the pace of increase slowing from October amid lower fuel prices and a resurgence of new Covid infections and deaths, but relaxed border control and new travel subsidies that took effect in October continued supporting some sectors, data released Tuesday by the Ministry of Economy, Trade and Industry showed.
Personal expenditures on services, such as dining out, traveling and entertainment, continues propping up overall consumption as the economy continues to reopen, while spending on goods remains largely flat.
The monthly Economy Watchers Survey, which was conducted by the Cabinet Office from Nov. 25 to Nov. 30 and released on Dec. 8, indicated that confidence has worsened. The seventh wave of the pandemic had eased by early September after the number of new inflections hit record highs from late July to late August, but Japan has now entered the eighth wave of the pandemic whose peak is projected to come around mid-January.
The key points from the METI’s Current Survey of Commerce:
* Retail sales rose a preliminary 2.6% on the year for the ninth straight year-over-year rise but the pace decelerated from increases of 4.4% (revised up from 4.3%) in October, 4.8% in September and 4.1% in August. The increase was much lower than the median economist forecast of a 3.7% rise (forecasts ranged from 0.1% to 5.1% gains). Sales fell 0.9% in February, when the Omicron variant caused a spike in Covid cases. The government eased public health restrictions in late March and has continued reopening the economy.
* Sales of automobiles rose 8.1% in November after rising 12.2% in October and 10.2% in September, which was the first year-on-year rise in 13 months, and falling 6.3% in August and posting double-digit percentage drops earlier.
* General merchandise sales at department stores and supermarkets marked the ninth straight year-on-year gain, up 2.9% in November, following increases of 6.6% in October and 8.8% in September. Sales of apparel and accessories fell 8.0% after rising 4.6% in October and dipping 2.3% in September, which was the first drop in three months.
* Sales of fuels fell 2.6% on the year in November, reflecting an earlier dip in global energy markets, after rising 1.6% in October, 7.5% in September. The pace of increase had slowed from a recent peak of 28.9% in November 2021. The government has been trying to cap retail gasoline price markups by providing subsidies to refineries.
* Demand for medicine and cosmetics remained strong, up 12.0% in November for the 19th straight increase, after rising 10.6% in October. Sales of machinery and equipment (largely consumer electronics) fell 2.2%, after a 1.0% drop in October and a 3.0% gain in September, which was the first rise in three months as a result of easing supply constraints.
* On the month, retail sales fell 1.1% on a seasonally adjusted basis in November, marking the first drop in five months, after a 0.3% rise (revised up from a 0.2% gain) in October and a 1.5% jump in September. The latest figure was weaker than the median forecast of a 0.7% gain (forecasts ranged from unchanged to a 1.3% increase). Many suppliers of food and beverages among other items jacked up prices on Oct. 1 at the start of the second half of fiscal 2022 to pass elevated producer and import costs, which is eroding the purchasing power of many households.
* The ministry maintained its assessment, saying retail sales are “picking up.” In September, it upgraded its view from the previous statement that sales were “picking up gradually.” It noted that the three-month moving average in seasonally adjusted retail sales rose 0.2% in November for a fourth straight gain after rising 1.0% the previous month.
Department Store Sales Recovering; Inbound Demand Strong
Industry data released Friday showed department store sales marked the ninth straight year-over-year rise in November, up 4.5%, slowing from increases of 11.4% in October, 20.2% in September and 26.1% in August. Sales were down 3.0% from the pre-pandemic November 2019, when there were remaining dampening effects of the sales tax hike to 10% from 8% the previous month. Compared to October 2018, last month’s sales were down 8.8%, although some stores continued posting gains from that year.
The Japan Department Stores Association noted that milder weather from mid-November dampened demand for winter clothing and a jump in new Covid cases discouraged some people from going to physical stores, while demand for luxury brands remained strong ahead of planned markups. The relatively weak yen and relaxed Covid border rules continued to boost spending by foreign visitors, up
403.2% on the year, accelerating from the 335.2% jump in October, but it remained below pre-pandemic levels, down 32.9% from November 2019. The pace of decline continued decelerating from 46.6% in October and 63.7% in September.