Japanese retail sales were unchanged last month from November, suggesting that consumer spending isn't contributing to a recovery in the world's second-largest economy.
Sales for all of last year at Japanese supermarkets, department stores, restaurants and other retailers fell 1.8 percent to ?128.4 trillion (US$1.21 trillion), the seventh year of decline, the Ministry of Economy, Trade and Industry said in Tokyo.
Japanese consumers are spending less because of declining wages and near-record unemployment, leaving the nation's economic recovery dependent on exports and corporate spending. Many retailers including Mitsukoshi Ltd, Japan's third-largest department store, aren't forecasting higher spending this year.
"We expect the situation will continue through this year," Mitsukoshi president Taneo Nakamura told a press conference in Tokyo yesterday. "Though some say the Japanese economy is improving, the retail industry hasn't perceived such a pick-up in sentiment."
Consumer spending has been the missing element in Japan's recovery from its third recession since 1991. Exports and investment by companies including Sharp Corp and Canon Inc accounted for all of Japan's 1.4 percent annualized pace of growth in the third quarter.
"Corporate profits are rising, but those increases are supported by companies' efforts to cut costs and wages, which is negative for consumption," said Motomitsu Honma, an economist at Sumitomo Mitsui Asset Management Co, which manages US$98 billion in assets.
The Topix Retail Trade Index, which tracks shares of 116 retailers, fell 0.4 percent to 641.70 at the 11am break in Tokyo, led by Aeon Co and Ito-Yokado Co. The broader Topix index fell 0.5 percent to 1058.36.
Retail sales had been expected to fall 1 percent last month from November, according to the median forecast in a Bloomberg News survey of seven economists. From a year earlier, December retail sales fell 0.1 percent, compared with a median forecast of a 1.8 percent drop.
Sales have fallen at Seiyu Ltd, Japan's fourth-largest retailer, and other service companies, which make up three-fifths of the US$4 trillion economy. The government said last week that demand for services fell a more-than-expected 2.3 percent in November from October.
Spending by households headed by a salaried worker fell 0.2 percent in November, the fourth drop in five months, and unemployment was unchanged at 5.2 percent, near the record high of 5.5 percent. Seiyu said its sales fell 3 percent in November, led by clothing and food.
Daiei Inc, Japan's third-biggest retailer, said sales fell 7 percent last month. Aeon, Japan's second-biggest retailer by sales, said same-store sales dropped 2.1 percent, while No. 5 Uny Co had a 3.3 percent drop.
"Japan's consumer spending remains in a severe environment," Shoichi Ogasawara, managing director at the Japan Chain Store Association, said at a press conference Monday in Tokyo.
The declines in sales last month from a year earlier were led by clothing, fuel, general merchandise and machinery and equipment.
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