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Japan consumption Index higher in March, but Q1 still likely a drag on upcoming GDP data.
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The Bank of Japan's Consumption Activity Index rose 1.2% m/m in March, for the second straight rise following +0.9% in February, data released by the BOJ Wednesday showed. However, the index fell 1.6% q/q in Q1, a first drop in three quarters following +2.6% in the fourth quarter of 2020, and a reminder that private consumption will weigh on the Jan-Mar GDP reading.
The March gain confirmed demand for durable goods was solid in line with BOJ expectations, although face-to-face services were weak. The BOJ assessment was "a pick-up in private consumption has paused recently due to increased downward pressure on consumption of services, such as eating and drinking as well as accommodation."
Japan's real average household spending fell 1.8% q/q in Q1, marking a third straight decline, the government data showed.
The BOJ's Consumption Activity Index is designed to forecast revised private consumption, not act as a preliminary estimate.
Source: Bank of Japan