MNI BRIEF: BOJ Solid Consumption Index Eases Spending Concern

The Bank of Japan's Consumption Activity Index posted the first m/m rise in two months in July, gaining 0.6% m/m, easing concern over private consumption and supporting the BOJ’s view that private consumption will likely continue increasing moderately, data released by the BOJ showed on Thursday.

Solid spending on nondurable good drove the increase which followed June's 0.6% fall, although spending on services edged lower.

The BOJ's Consumption Activity Index is designed to forecast revised private consumption, not act as a preliminary estimate. The Cabinet Office will release the second preliminary GDP for Q2 on Friday and private economists expect private consumption to be unrevised at -0.5% q/q.

The BOJ data contradicted the government’s household spending, which fell 2.7% m/m in July for the first drop in two months following 0.9% in June. Consumer sentiment remained firm, supporting the future spending view, but bank officials are vigilant against spending as real income stayed negative.