REPEAT: Japan July Household Spending Slips But Pickup Intact

Repeats Story Initially Transmitted at 00:22 GMT Aug 29/20:22 EST Aug 28

--Japan July Household Spending -0.2% Y/Y; MNI Median Forecast +0.6%

--Japan July Household Spending Posts 1st Y/Y Drop in 2 months

--Japan May-July Household Spending 3-Month Moving Average +0.7%

--Japan July Core Spending Marks 1st M/M Drop in 2 Months

     TOKYO (MNI) - Japan's Family Income and Expenditure Survey of Households

with Two or More People released by the Ministry of Internal Affairs and

Communications Tuesday:

     * Real average household spending posted the first year-on-year drop in two

months, down 0.2% in July after a sharp 2.3% rise in June, but the government

maintained its view that spending is on a recovery trend. The three-month moving

average of May-July spending rose 0.7%, the second straight rise after rising

0.2% in April-June, reflecting a gradual increase in income.

     * The July figure came in weaker than the MNI median economist forecast for

+0.6% on year. The decrease was mainly due to an unfavorable base effect caused

by a sharp increase in spending on home repairs and maintenance in July last

year. In addition, fish prices remained high due to a poor catch this year. In

June, spending posted the first year-on-year rise in 16 months, as unusually dry

weather during this year's rainy season led to a sharp increase in home

renovation work compared to a year earlier.

     * On the other hand, spending on automobiles continued to show a

year-on-year rise as the effect of the introduction of new models lingered and

heat waves pushed up demand for refrigerators. Spending on mobile communications

continued to rise in line with the spread of smartphones. There was also a

calendar factor, as mobile bill payments this July were made on the last day of

the month, a Monday, while those for July last year were made in August, as July

31 fell on a Sunday.

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

volatile items (close to private consumption patterns in GDP data) fell 0.3% on

month in July on a seasonally adjusted basis, the first month-on-month drop in

two months following +0.8% in June.

     * Average real income of households with salaried workers jumped 3.5% on

year in July, the second consecutive rise after +0.1% in June and -1.7% in May.

--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

--MNI BEIJING Bureau; +1 202-371-2121; email: john.carter@mni-news.com