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MNI DATA ANALYSIS: Japan Jan Spending Flat Amid Bad Weather
--Feb Lunar New Year May Be Boon But Cold Winter Lingers
By Hiroshi Inoue
TOKYO (MNI) - Bank of Japan data released Wednesday indicated that consumer
spending was flat with a slight pickup undertone at the start of the
January-March quarter, hit by snow storms and high prices of food and energy.
The BOJ's supply-side Consumption Activity Index posted the first
month-on-month rise in two months in January, up a real 0.4% on a seasonally
adjusted basis, but failed to make up for the 0.9% slump in December.
The three-month moving average of the index gained 0.2 point in the
November-January period after edging up 0.1% in the previous three-month period,
showing a slow pace of increase.
BOJ officials judge that private consumption, which accounts for about 60%
of the total domestic output, still lacks momentum as many firms are reluctant
to share wealth with workers despite record-high profits and tightening labor
--MODERATE SPENDING PICKUP
But they still maintain the view that consumption is "increasing
moderately" as the BOJ board assessed in its quarterly Outlook Report released
Looking ahead, the consumption index appears to have been propped up by
solid inbound and outbound service demand in February.
Chinese tourists rushed to Japan during the Lunar New Year holidays in
February, pushing up the prices for accommodations here, while strong Japanese
demand for traveling to South Korea for the PyeongChang Winter Olympics led to
higher prices for overseas tours, February Tokyo consumer price index data, a
leading indicator of the national CPI, showed last week.
--WEAK HOUSEHOLD DATA
January household spending data, due Friday, is expected to show the
dampening effects of the bad weather and frugal spending patterns amid rising
costs of daily necessities.
The MNI median forecast by 14 economists is a 1.2% decline in real average
household spending in January, which would be the second straight year-on-year
drop after dipping 0.1% in December and rising 1.7% in November. The forecasts
ranged from -2.5% to +0.5%.
Demand for winter clothing and heaters may be solid but bad news for
household spending is that freezing temperatures lingered across most of Japan
in February, discouraging people from going shopping, while heavy snowfalls
continued to disrupt traffic and cause casualties in some regions.
Retail sales rose 1.6% in January for the third straight year-on-year rise
but the pace of growth decelerated from +3.6% in December as the lingering cold
weather dampened demand for spring clothing and car sales slipped due to fading
effects of new models introduced earlier.
--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: email@example.com
--MNI Tokyo Bureau; tel: +81 90-4670-5309; email: firstname.lastname@example.org
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