MNI: BOJ Q4 Consumption Index Rebound Indicates Solid GDP

     TOKYO (MNI) - The Bank of Japan's supply-side Consumption Activity Index

released Wednesday showed a slight gain in the final quarter of 2017, indicating

that private consumption supported sustained Q4 economic growth in GDP data due

next week.

     Japan's gross domestic product for the October-December quarter is expected

by economists to post a modest 0.2% rise on quarter, or an annualized 0.9%, led

by continued solid capital investment and a rebound in consumer spending. The

expected GDP expansion in Q4 would be the eighth consecutive quarterly gain.

     The median economist forecast for private consumption, which accounts for

about 60% of GDP, is +0.4% on quarter in Q4, which would be the first rise in

two quarters after falling 0.5% in Q3.

     The Cabinet Office will release preliminary GDP data for the fourth quarter

of 2017 at 0850 JST on Wednesday, Feb. 14 (2350 GMT on Feb. 13).

     The BOJ's consumption index fell a real 0.6% on a seasonally adjusted basis

in December for the first drop in three months after rising 0.9% in November.

     However, the index rebounded 0.3% in the October-December quarter from the

previous three months after falling 0.5% in Q3 and rising 0.9% in Q2.

     The BOJ's consumption indicator reflects a wide range of sales and

supply-side statistics on goods and services and helps capture the short-term

consumption trend, and it has a close correlation to final gross domestic

product figures.

     Government data released late last month showed that real average household

spending posted the first year-on-year drop in two months in December, down

0.1%, after rising 1.7% in November and being unchanged in October

     But the decrease in December household spending was led by what officials

see as temporary factors -- heavy snow in northern regions hampered home

maintenance and repairs while purchases of automobiles dipped after recent

increases. Consumers also trimmed spending on fresh vegetables and fish as their

prices remained high.

     The core spending index, which excludes housing, motor vehicles and other

volatile items (similar to private consumption patterns in GDP data), fell 1.2%

in December compared with the previous month, on a seasonally adjusted basis. It

was the first month-on-month drop in two months, after a rise of 2.7% in

November and a fall of 1.8% in October.

     The Cabinet Office's Private Consumption Integrated Estimates index, which

is based on both supply- and demand-side data, posted the second straight

month-on-month rise in November, up a sharp 1.1%, after rising 0.2% in October

and falling 0.5% in September.

     The government plans to release December and Q4 consumption index figures

before the Feb. 14 release of the Q4 GDP.

--MNI Tokyo Bureau; tel: +81 90-4670-5309; email: max.sato@marketnews.com

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