REPEAT:MNI 5 THINGS: Japan May Spending Slumps Amid Low Income

--Japan May Household Spending -3.9% Y/Y; MNI Median -1.8%

--Japan May Household Spending Posts 4th Straight Y/Y Drop

--Japan May S/A Household Spending -0.2% M/M; Apr -1.6%

--Japan May S/A Household Spending Post 4th Straight M/M Drop

--Japan May Per-Household Spending Trend -2.7% Y/Y; Apr -0.8%

--Japan May Total Household Spending Trend +0.3% Y/Y; Apr +0.4%

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

people posted the fourth straight year-on-year drop in May, down sharply by

3.9%, as shorter Golden Week holidays cut eating out and moderate weather

trimmed electricity use, data released Friday by the Ministry of Internal

Affairs and Communications showed.

     Spending was also down on month amid a continued drop in real income,

indicating sluggish private consumption will lead to only a modest rebound in

the April-June GDP after the economy posted the first contraction in about two

years in January-March.

     The ministry left its assessment on household spending unchanged after

downgrading it for the April data for the first time in two months, saying

"weakness is seen in consumption."

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

Households.

     * Real average household spending slumped 3.9% on year in May after

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

straight drop after -1.3% in April. It came in much weaker than the MNI median

economist forecast for a 1.8% drop.

     * The decrease was caused by lower spending on ceremonies and gift money.

It was also due to lower expenditures on eating out as May 5 fell on a Saturday,

making the Golden Week holidays slightly shorter than a year before. Purchases

of fish also declined in light of supply shortages.

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

in May on a seasonally adjusted basis, down 0.2% after -1.6% in April and -0.1%

in March.

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

volatile items (close to private consumption patterns in GDP data) fell a

seasonally adjusted real 3.9% on month in May, the second straight m/m drop

after -0.6% in April.

     * The average real income of households with salaried workers fell 0.3% on

year in May after adjustment for the statistical gap, marking the fifth straight

y/y drop after -0.2% in April. Overtime working hours have been falling as firms

and employees are seeking a better work-life balance. Non-regular jobs for

people aged 60 years or older are also increasing, reducing the per-household

income.

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

patterns, fell a real 2.7% on year in May vs. -0.8% in April, while the Total

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

in the total domestic output, rose a real 0.3% on year vs. +0.4% in the previous

month.

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