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JAPAN DATA: Real Household Spending Better Than Forecast, But Still Negative

JAPAN DATA
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Japan Sep household spending was -1.1% y/y, better than the -1.8%y/y consensus forecast. Spending was down -1.3% in m/m terms. 

  • Whilst the headline result is better than expected, real spending trends remain in negative territory. The chart below plots spending in y/y terms (the white line) against real cash earnings growth, which printed yesterday. Spending has barely been positive in recent years, albeit we aren't as negative as we were in 2023.
  • The authorities will continue to hope for better outcomes, with the aim of positive real wages boosting spending outcomes.
  • For the BoJ, at the margin, the data is likely to add to the wait and see approach, with more information on 2025 wage gains likely to materialize in the first part of next year. 

Fig 1: Real Household Spending (White Line) & Real Labor Earnings 

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Japan Sep household spending was -1.1% y/y, better than the -1.8%y/y consensus forecast. Spending was down -1.3% in m/m terms. 

  • Whilst the headline result is better than expected, real spending trends remain in negative territory. The chart below plots spending in y/y terms (the white line) against real cash earnings growth, which printed yesterday. Spending has barely been positive in recent years, albeit we aren't as negative as we were in 2023.
  • The authorities will continue to hope for better outcomes, with the aim of positive real wages boosting spending outcomes.
  • For the BoJ, at the margin, the data is likely to add to the wait and see approach, with more information on 2025 wage gains likely to materialize in the first part of next year. 

Fig 1: Real Household Spending (White Line) & Real Labor Earnings 

Keep reading...Show less