A woman browses in a clothing store in Tokyo. Photo: REUTERS file
business

Japan household spending rises slightly in December

13 Comments
By Leika Kihara

Japan’s household spending rose slightly in December from a year earlier to mark the first increase in four months, government data showed on Friday, suggesting a pick up in consumption may moderate pressure from slowing global demand.

The data offers some relief to Bank of Japan policymakers worried that heightening overseas economic uncertainties may discourage firms from raising wages and hurt consumption.

The 0.1 percent year-on-year gain fell short of a median market forecast for a 0.8 percent rise and followed a revised 0.5 percent drop in November.

Taken together with separate wages data, also released on Friday, the numbers suggested higher household income may help underpin consumption. The inflation-adjusted real wages rose in December from a year earlier.

Prime Minister Shinzo Abe’s “Abenomics” stimulus policies have boosted corporate profits by lifting stocks and giving exporters a competitive advantage overseas through a weaker yen.

But they have failed to fire up private consumption, which accounts for about 60 percent of gross domestic product (GDP), as companies remain reluctant to raise wages.

Japan’s economy shrank in the July-September quarter last year. Data due next week will likely show that growth rebounded in the fourth quarter led by capital expenditure and consumer spending, a Reuters poll showed.

But weak exports could dampen the economy’s momentum, especially as slowing global demand and U.S.-Sino trade frictions have already hurt business sentiment, analysts say.

The BOJ is caught in a dilemma. Years of heavy money printing have failed to accelerate inflation, forcing the central bank to maintain its massive bond buying program despite financial institutions having to endure weak profits from near-zero interest rates.

Left with diminished policy ammunition, many BOJ policymakers are wary of ramping up stimulus unless risks threaten to derail Japan’s economic recovery.

Japan’s annual core consumer inflation hit a seven-month low of 0.7 percent in December and may ease further in coming months due to lower oil prices and soft household spending, analysts say.

© (c) Copyright Thomson Reuters 2019.

©2019 GPlusMedia Inc.

13 Comments
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Are those real wage figures the true numbers, or the finance ministry fiddled values? Consumption is unlikely to rise when real wages are falling.

3 ( +3 / -0 )

So, household spending rose a little in December? How shocking, NOT! There is a little thing called, Christmas. Perhaps they have heard of it.

3 ( +5 / -2 )

How much of this can be put down to bonuses, spending for New Year, and the increasing embrace of Christmas?

4 ( +5 / -1 )

There is a little thing called, Christmas. Perhaps they have heard of it.

Irrelevant. The figures were compared to December 2017, not November 2018. Not that hard to figure out really.

-3 ( +1 / -4 )

The figures are most likely real. December is a spending month in Japan. They are entering into to most busy study season, also people prepare to host or travel back to their families for New Years. Kids receive money. Workers receive their bonuses. There are plenty of reasons why people spend during that particular time.

2 ( +2 / -0 )

How much of this can be put down to bonuses, spending for New Year, and the increasing embrace of Christmas?

There are plenty of reasons why people spend during that particular time.

The article says spending is up on December the previous year. For the reasons pointed out, there is little meaning in comparing different months.

-3 ( +1 / -4 )

@Cleo - That’s why I made a point of saying the ‘increasing embrace of Christmas’. It’s not surprising that spending is up slightly compared to last Dec. I predict that next year will show a similar increase.

The article does make a point saying that

Japan’s household spending rose slightly in December from a year earlier to mark the first increase in four months

Again it’s not a surprise that spending in December is higher than in the previous 3-4 months.

2 ( +2 / -0 )

it’s not a surprise that spending in December is higher than in the previous 3-4 months.

Of course it's not a surprise that people spend more in December. But if the other 3-4 months are calculated on a year-on-year basis, the comparison is October-October, November-November, December-December, not October-December.

Can't say I'm noticing any 'increasing embrace of Christmas' in these parts. Last year as every year I was running round organising Christmas while friends and neighbours did the usual desultory KFC+strawberry shortcake and then got on with thinking about what they were doing for New Year.

-3 ( +1 / -4 )

Well, the 2018 figures are compared with 2017 when the numbers were fudged ( or innacurate by govt admission) so I,d rather wait for the opposition calculations to get the real picture .

3 ( +3 / -0 )

Spending on what?

-1 ( +0 / -1 )

Well, December is also the month in Japan where people spend month to buy things to clean their houses, cars, etc.

0 ( +0 / -0 )

hat looks like a LONDON SORTS to me - everything there is btween 480jpy nd 980jpy anything more is sugoi takai

0 ( +0 / -0 )

Left with diminished policy ammunition,

Pundits have been saying that for years, and yet the BOJ also finds new ammunition. That's the luxury of printing the world's safe-haven currency and owning one's own debts.

"many BOJ policymakers are wary of ramping up stimulus unless risks threaten to derail Japan’s economic recovery."

The "risk" threatening to "derail" the recovery are the corporations, who refuse to give wage raises in line with their record-breaking earnings growth. Fix that, and you've fixed all those problems. But there's no will to do that, because the super rich would oppose it.

0 ( +0 / -0 )

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