MNI SOURCES: Japan Retail Sales Show Goods Spending Picking Up

--Govt May Upgrade Retail Sales View, Cautious On Household Spending

By Max Sato

     TOKYO (MNI) - Solid gains in Japanese retail sales in November showed that

the recent pickup in consumption of goods is becoming firmer, which may prompt

the government to upgrade its view on retail sales if the trend continues in

December, a senior official said Thursday.

     Retail sales rebounded 2.2% in November, posting the first year-on-year

rise in two months after slipping 0.2% in October because of stormy weather, the

Ministry of Economy, Trade and Industry said. Retail sales had gone up for 11

months through September, the longest stretch in seven years.

     The November rise was led by higher fuel prices and solid demand for

automobiles, particularly mini-vehicles and imports, as well as strong sales of

winter clothing and appliances. Some consumers had waited for the November

release of the iPhone X, while cold weather boosted demand for heaters.

     --RETAIL SALES UPTREND

     "The content of the November retail sales data is good, improving from the

previous month. The three-month moving average also posted a large increase,"

Kazuhiko Manaka, director of the Office of the Current Survey for the Service

Industry at the METI, told MNI. "But we want to see data for one more month and

decide whether we should upgrade our view."

     The METI maintained its assessment that retail sales showed signs of a

pickup.

     In November, department store sales rebounded 2.2% from the period last

year, led by solid sales of winter clothing and continued strong domestic and

overseas demand for cosmetics, high-end jewelry and watches. Department store

sales fell 1.8% in October, when typhoons hit many parts of the country for two

weekends in a row and there was one less Saturday compared with the year before.

     --SPENDING BY MIDDLE-INCOME EARNERS

     "Wealthy consumers and visitors from overseas continued to buy high-end

goods, but this trend appeared to have spread to middle-income consumers in

November data," Manaka said. "Spending on services may be a different story, but

consumption of goods is improving."

     Data from the Ministry of Internal Affairs and Communications released

Tuesday showed a pickup in consumption of goods and services.

     Real average household spending posted the first year-on-year rise in three

months in November, up 1.7%, after being unchanged in October and falling 0.3%

in September. The increase was led by demand for replacing refrigerators and

washing machines with ones with improved functions, purchases of the popular

iPhone X, and spending on overseas holiday tours.

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

volatile items (similar to private consumption patterns in GDP data), jumped

2.7% in November compared with the previous month, on a seasonally adjusted

basis. It was the first month-on-month rise in two months, after a fall of 1.8%

in October and a rise of 0.1% in September.

     --CAUTIOUS ON HOUSEHOLD SPENDING

     The Ministry of Internal Affairs and Communications maintained its

assessment that "consumption has been picking up." It last revised up its view

in June.

     "The November increase was large, but we must continue monitoring figures

for the time being for a clearer trend as household spending tends to fluctuate

widely," a ministry official told MNI.

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

--MNI Beijing Bureau; +86 (10) 8532-5998; email: rich.dirks@marketnews.com

--MNI Beijing Bureau; +86 (10) 8532-5998; email: vince.morkri@marketnews.com

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