Japan’s household spending last month fell for a fifth straight month and retail sales also dropped, underscoring the weakness in domestic demand.
The jobless rate was the lowest since 1995.
Household spending fell 0.5 percent in July from a year earlier, the statistics bureau said yesterday (forecast minus-1.5 percent).Retail sales fell 0.2 percent from a year earlier (forecast minus-0.9 percent), according to a Ministry of Economy, Trade and Industry report. Compared with a month earlier, they rose 1.4 percent (forecast plus 0.8 percent).
The unemployment rate was 3 percent (forecast 3.1 percent). The number of employed women (28.3 million) and women’s labor participation rate (66.3 percent) rose to a record high, according to the statistics bureau.
Japan’s economy is struggling to gain momentum, evidenced by slower expansion in GDP than economists forecast in the second quarter. Even as the job market remains tight, the yen’s gains since the start of this year are hurting exports, making businesses more reluctant to invest.
Meanwhile, consumers are wary of spending because wages are barely rising.
This is putting pressure on the Bank of Japan to consider more monetary stimulus at its meeting on Sept. 20 and Sept. 21.
“Overall, consumer spending remains weak as wage growth is dull,” Yoshiki Shinke, an economist at Dai-ichi Life Research Institute in Tokyo, said before the reports were released. “Households have been keeping their purse strings tight since the sales-tax increase in 2014.”
SMBC Nikko Securities Inc economist Koya Miyamae said spending is recovering since the start of the year, though “won’t grow dramatically.”
Miyamae said big gains in household spending would require “structural reforms like changing labor market rules.”
Atsushi Takeda, an economist at Itochu Corp in Tokyo, said retailers were helped as last month had more weekends compared with other months, and people shop more on weekends.
He sees the gains as temporary.
“Demand among consumers isn’t worsening but isn’t improving,” he said.
Compared with June, household spending rose 2.5 percent last month. The job-to-applicant ratio was unchanged at 1.37 (forecast 1.38).
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