MNI DATA ANALYSIS: Japan Mar Household Spending Dips; Q1 Soft

--Japan Mar Real Avg Household Spending -0.7% Y/Y; MNI Median +1.3%

--Japan Mar S/A Real Avg Household Spending -0.1% M/M; Feb -1.5%

--Japan Govt Keeps View on Spending: Pickup Stalling

--Japan Mar Per-Household Consumption Trend Index Real -1.6% Y/Y 

--Japan Mar Total Consumption Trend Index Real +0.5% Y/Y

     TOKYO (MNI) - Japan's real average spending by households with two or more

people posted the second straight year-on-year drop in March, down 0.7% after

adjustment for the gap caused by using two different survey methods, following

-0.9% in February, data released Tuesday by the Ministry of Internal Affairs and

Communications showed.

     The severe winter weather with heavy snow in some regions dampened

consumption in the first two months of 2018. March saw mild weather, which

supported some spending but was not strong enough to boost Q1 figures.

     Economists expect the gross domestic product for the January-March quarter

to be flat both on quarter and at an annualized pace, as solid capital

investment is offset by weak private consumption. They do not read too much into

today's household spending data in forecasting Q1 GDP as demand-side data

accounts for only 15% of the data used for estimating private consumption in the

GDP.

     The ministry left its assessment on household spending unchanged from the

previous month, saying "the pickup is stalling." Last month, it downgraded its

view for the first time since November 2015.

     The key points from the monthly Family Income and Expenditure Survey on

Households.

     * March spending came in much weaker than the MNI median economist forecast

for a 1.3% rise. The decrease was led by lower expenditures on home maintenance

and repairs, compared with a year before when the government's subsidy program

pushed up spending on renovations. The March spending decrease was also due to a

continued decline in the use of landline phones as well as a one-off drop in

payments of mobile communications which were delayed into April. In March,

spending on automobiles and private university tuitions rose on year but these

items tend to fluctuate from month to month.

     * Average real spending also posted the second straight month-on-month drop

in March on a seasonally adjusted basis but the pace of decrease decelerated to

-0.1% from -1.5% in February. The core spending index, which excludes housing,

motor vehicles and other volatile items (close to private consumption patterns

in GDP data) fell 0.6% on month in March, also the second straight m/m drop

after 2.2% in February.

     * In January-March, average real spending by total households (including

one-person households) fell 1.2% on quarter on a seasonally adjusted basis after

-0.3% in October-December, the third straight quarterly drop, while adjusted

spending by households with two or more people rose 0.5% on quarter in Q1 after

-0.6% in Q4, the first q/q rise in three quarters.

     * In fiscal 2017, average real household spending rose 0.7% after -1.6% in

fiscal 2016, posting the first rise since +0.4% in fiscal 2013.

     * The average real income of households with salaried workers slumped 3.8%

on year in March after adjustment for the statistical gap, marking the third

straight y/y drop after -2.4% in February.

     * The Household Consumption Trend Index, indicating per-household spending

patterns, fell a real 1.6% on year in March vs. -1.5% in February, while the

Total Consumption Trend Index, which is designed to show similar consumption

patterns in the total domestic output, rose a real 0.5% on year vs. +0.6% in the

previous month.

--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hiroshi.inoue@marketnews.com

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

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