By Max Sato
(MaceNews) – Japan’s household spending posted the second straight year-on-year drop in September as restrictions on economic activity remained in place until the end of the month in light of a resurgence in coronavirus cases in August, data released Friday by the Ministry of Internal Affairs and Communications showed.
As the number of new Covid-19 cases drifted lower toward the end of the month, the key indicator of GDP’s private consumption rebounded on the month, but household spending marked the first quarter-on-quarter dip in two quarters in the July-September period, confirming forecasts that Q3 GDP contracted on weaker consumption, business investment and exports.
The Cabinet Office will release preliminary July-September GDP data at 0850 JST on Monday, Nov. 15 (2350 GMT/1850 EST Sunday, Nov. 14).
The key points from the monthly Family Income and Expenditure Survey on Households:
- Real average spending by households with two or more people fell 1.9% on year after slumping 3.0% in August, rising 0.7% in July and plunging 4.3% in June. The key indicator of consumption came in firmer than the median economist forecast of a 3.9% drop.
- The year-on-year decrease in September was led by lower spending on eating out (drinks, Japanese food), domestic holiday tours, hotels and durable goods (air conditioners, refrigerators). By contrast, expenditures on takeout food continued growing as part of the stay-home lifestyle during the pandemic.
- On the month, real average household spending rebounded a seasonally adjusted 5.0%, marking the first month-on-month rise in five months after falling 3.9% in August. The pace of increase was stronger than the median economist forecast of a 2.8% rise.
- In the July-September quarter, real average household spending plunged a seasonally adjusted 4.7% from April-June, when it rose 3.6%. This indicates a pullback in private consumption, which accounts for about 55 percent of the gross domestic product and is thus expected to cause Q3 GDP to post its first contraction in two quarters after rebounding 0.5% on quarter (annualized 1.9%) in Q2 and shrinking 1.1 percent (4.2 percent) in Q1. Exports are also forecast to have slumped in Q3 as pandemic-caused supply delays forced automakers to cut production and shipments.
- The average real income of households with salaried workers rose 2.5% on year in September, posting the second straight gain after rising 5.4% in August and
falling 2.2% in July and slumping 10.8% in June. The weakness through July was caused by a plunge in “special income,” compared to 2020, when many individuals received a one-time cash handout worth Y100,000 (about $900) from the government as part of its stimulus measures. - The main bread-earner’s income in the average household marked the sixth consecutive year-on year gain on year in September, up 4.7% (vs. +8.5% in August), while the average spouse income poste the first drop in six months, down 0.1% (vs. +0.4% the previous month).