Economic IndicatorsTop News

Japan April household spending falls 11.1% year/year

imageEconomic Indicators26 minutes ago (Jun 04, 2020 10:20PM ET)


(C) Reuters. FILE PHOTO: A shopper wearing a protective mask looks at shelves at a supermarket in Tokyo


By Leika Kihara

TOKYO (Reuters) – Japan’s household spending fell at the fastest pace on record in April as the coronavirus shut down travel and dining-out in the world’s third-largest economy, and prospects of higher jobs losses chilled consumer sentiment.

The dismal number will keep policymakers under pressure to prevent a larger decline in the economy, which is expected to fall deeper into recession this quarter.

Household spending tumbled 11.1% in April from a year earlier, government data showed on Friday, marking the fastest pace of decline since comparable data became available in 2001.

The decline was slower than a median forecast of a 15.4% fall and followed March’s 6.0% decline.

Many analysts expect consumption to have bottomed out in April or May, as businesses re-open after last month’s lifting of nationwide lockdowns. But any rebound will be slow and fragile, as companies and households remain wary of spending, they say.

“Unless effective vaccines are developed, a strong recovery cannot be expected for the foreseeable future,” said Takeshi Minami, chief economist at Norinchukin Research Institute.

Friday’s data showed some winners and losers.

Spending on bars, plane tickets, hotels and amusement parks tanked by around 90% as households were forced to stay home, the data showed.

On the other hand, stay-home policies boosted spending on pasta by 70%, instant noodles by 43% and sanitary goods like face masks by 124%, it showed.

Overall, however, an expected rise in job losses and the hit to household sentiment from the pandemic will weigh on consumption, analysts say.

“A lot of people are out of work and couldn’t look for jobs during lockdowns in April. Wages are likely to fall too, which will weigh on consumption,” said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute.

“Japan’s economy will rebound in July-September if there’s no renewed spike in infections. Even so, it may take until 2023 or 2024 for the economy to return to pre-COVID levels.”

Prime Minister Shinzo Abe announced a state of emergency in April requesting citizens to stay home and businesses to close, hammering an economy that was already suffering from the hit from last year’s sales tax hike and the U.S.-China trade war.

The government has compiled two stimulus packages worth a combined $2.2 trillion to combat the virus fallout on the economy, which slipped into recession in the first quarter.

While Abe has lifted nationwide lockdowns, analysts expect the economy to suffer an annualised 22% contraction in the current quarter and recover only modestly in the second half of this year. [nL4N2CV1UF]

Japan’s household spending falls at record pace as virus stalls economy

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Related Articles

Back to top button
Get the daily email that makes reading the news actually enjoyable. Stay informed and entertained, for free.
Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!