REPEAT: MNI DATA ANALYSIS: Japan Feb Household Spending Slumps

--Govt Downgrades View on Spending: Pickup Stalling 

--Feb Per-Household Consumption Trend Index Real -1.5% Y/Y

--Feb Total Consumption Trend Index Real +0.9% Y/Y

     TOKYO (MNI) - Japan's real average household spending posted the first

year-on-year drop in two months in February, down 0.9% after adjustment for the

gap caused by using two different survey methods, following +1.9% in January,

data released by the Ministry of Internal Affairs and Communications Friday

showed.

     The weak data prompted the ministry to downgrade its view on household

spending for the first time in more than two years. The average spending also

fell 1.5% on month in February, the first drop in two months after +2.7% in

January.

     The key points the monthly Family Income and Expenditure Survey on

households with two or more people:

     * February spending came in weaker than the MNI median economist forecast

for a 0.1% rise, which was based on slower retail sales amid the severe winter

weather. The decrease was led by lower expenditures on home repairs (in payback

for a rise in January), fresh vegetables (lingering high prices) and personal

computers (there was rush demand in early parts of 2017 before Microsoft ended

support for the Windows Vista operating system in April). On the upside,

spending on hotels, holiday tours and eating out rose on year, thanks to the

long weekend in February (the public holiday fell on a Saturday last year).

     * The ministry downgraded its assessment on household spending for the

first time since November 2015, saying that "the pickup is stalling." Last

month, it said spending was "picking up," a view it had held for eight months.

     * To see the recent trend, the ministry noted that the three-month moving

average of December-February household spending rose just 0.3% from the previous

three-month period, the fifth straight increase but slowing from +1.1% in

November-January.

     * The average real income of households with salaried workers slumped 2.4%

on year in February after adjustment for the statistical gap, marking the second

straight y/y drop after -3.3% in January. Regular incomes earned by household

heads fell because the share of the household heads aged 60 years or older

increased to 22.7% of the surveyed households from 20.0% a year before.

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

patterns, fell a real 1.5% on year in February vs. -0.7% in January, while the

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

patterns in the total domestic output, rose a real 0.9% on year vs. +0.9% in the

previous month, indicating private consumption might have supported GDP growth

in the January-March quarter.

     As part of its efforts to present a more accurate reading of final demand,

the ministry has made survey forms for the existing household spending data

easier to fill in by sample households with the introduction of online

book-keeping that covers digital settlements and allows digital reading of

receipts.

     When the ministry smoothes out the statistical gap generated by the change

in the survey method, it will try to show whether a possible upward movement is

from the new digital input or from improvement in the economy.

     In February, real average household spending rose 0.1% on year before

adjustment for the gap, firmer than the adjusted figure of the 0.9% decline.

     Initially, the ministry is asking half of the sample households to

participate in online submission of their spending patterns and ask the other

half to use the existing paper forms, which are now more user-friendly. The new

digital method may catch expenditures that were left out in the analogue input.

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