REPEAT: MNI DATA ANALYSIS: Japan Jan Spending Flat on Weather

--Feb Lunar New Year May Be Boon But Cold Winter Lingers 

By Hiroshi Inoue

     TOKYO (MNI) - Bank of Japan data released Wednesday indicated that consumer

spending was flat with a slight pickup undertone at the start of the

January-March quarter, hit by snow storms and high prices of food and energy.

     The BOJ's supply-side Consumption Activity Index posted the first

month-on-month rise in two months in January, up a real 0.4% on a seasonally

adjusted basis, but failed to make up for the 0.9% slump in December.

     The three-month moving average of the index gained 0.2 point in the

November-January period after edging up 0.1% in the previous three-month period,

showing a slow pace of increase.

     BOJ officials judge that private consumption, which accounts for about 60%

of the total domestic output, still lacks momentum as many firms are reluctant

to share wealth with workers despite record-high profits and tightening labor

conditions.

     --MODERATE SPENDING PICKUP

     But they still maintain the view that consumption is "increasing

moderately" as the BOJ board assessed in its quarterly Outlook Report released

in January.

     Looking ahead, the consumption index appears to have been propped up by

solid inbound and outbound service demand in February.

     Chinese tourists rushed to Japan during the Lunar New Year holidays in

February, pushing up the prices for accommodations here, while strong Japanese

demand for traveling to South Korea for the PyeongChang Winter Olympics led to

higher prices for overseas tours, February Tokyo consumer price index data, a

leading indicator of the national CPI, showed last week.

     --WEAK HOUSEHOLD DATA

     January household spending data, due Friday, is expected to show the

dampening effects of the bad weather and frugal spending patterns amid rising

costs of daily necessities.

     The MNI median forecast by 14 economists is a 1.2% decline in real average

household spending in January, which would be the second straight year-on-year

drop after dipping 0.1% in December and rising 1.7% in November. The forecasts

ranged from -2.5% to +0.5%.

     Demand for winter clothing and heaters may be solid but bad news for

household spending is that freezing temperatures lingered across most of Japan

in February, discouraging people from going shopping, while heavy snowfalls

continued to disrupt traffic and cause casualties in some regions.

     Retail sales rose 1.6% in January for the third straight year-on-year rise

but the pace of growth decelerated from +3.6% in December as the lingering cold

weather dampened demand for spring clothing and car sales slipped due to fading

effects of new models introduced earlier.

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