REPEAT: MNI DATA ANALYSIS: Dec Data Show Solid Q4 GDP Spending

By Max Sato

     TOKYO (MNI) - December household spending and retail sales released Tuesday

indicate solid consumption in preliminary October-December GDP data due out on

Feb. 14.

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

months in December, down 0.1%, after rising 1.7% in November and being unchanged

in October, data from the Ministry of Internal Affairs and Communications

showed.

     But a ministry official noted the three-month moving average of retail

sales in the October-December quarter rose 0.6% for the third straight

year-on-year rise after rising 0.4% in September-November.

     --HOUSEHOLD SPENDING PICKING UP

     "There is no change to the recent trend," he said.

     The ministry maintained its assessment that "consumption has been picking

up." It last revised up its view in June 2017.

     The decrease in December household spending was led by what officials see

as temporary factors -- heavy snow in northern regions hampered home maintenance

and repairs while purchases of automobiles dipped after recent increases.

Consumers also trimmed spending on fresh vegetables and fish as their prices

remained high.

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

volatile items (similar to private consumption patterns in GDP data), fell 1.2%

in December compared with the previous month, on a seasonally adjusted basis. It

was the first month-on-month drop in two months, after a rise of 2.7% in

November and a fall of 1.8% in October.

     --RETAIL SALES STRONG

     Among other key indicators, retail sales surged 3.6% in December, posting

the second straight year-on-year rise after rising 2.1% in November and falling

0.2% in October, the Ministry of Economy, Trade and Industry said. Retail sales

had gained for 11 months through September, the longest stretch in seven years.

     The December rise was led by higher fuel prices as well as solid demand for

automobiles and consumer electronics.

     On the month, retail sales rose 0.9% on a seasonally adjusted basis in

December, the second consecutive rise after +1.8% in November, leading to a 1.4%

quarter-on-quarter increase in October-December after -0.1% in July-September.

     The METI upgraded its view that retail sales are "picking up moderately."

Until last month, it said retail sales showed signs of a pickup.

     In the third quarter, real gross domestic product grew a sharp 0.6% on

quarter, or an annualized +2.5% as a rebound in net exports offset a slump in

consumer spending caused by bad weather.

     Private consumption, which accounts for about 60% of GDP, fell 0.5% on

quarter in Q3, the first drop in five quarters after+0.9% in Q2. The decrease in

spending was seen in automobiles, food and beverages and mobile phones.

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