ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintIcon Twitter
Economy

Japan household spending falls for 2nd straight month in November

Decline of 2% reflects lingering impact of sales tax hike

A shop in Tokyo on Oct. 1: Japan's consumption tax that day rose to 10% from 8%.   © Reuters

TOKYO (Reuters) -- Japanese household spending fell for a second straight month in November, government data showed on Friday, reflecting a pullback in private consumption after the October sales tax hike, although the pace of decline slowed.

The world's third-largest economy is struggling to regain momentum after households tightened their belts following the sales tax hike in October and as slower global demand hit exports.

A pick-up in consumer spending is needed to help underpin the economy and achieve the Bank of Japan's elusive price target.

Although some companies started passing on rising costs to households, many are still reluctant to do so for fear of losing customers as higher prices could dent consumer spending.

Household spending fell 2.0% in November from a year earlier, bigger fall than a median forecast for a 1.7% decline.

It tumbled 5.1% in October, the biggest fall since March 2016 when spending fell 5.3%.

From the previous month, it rose 2.6%, which compared with the median estimate for a 3.4% month-on-month gain and was a rebound from the steep 11.5% monthly drop in October.

Japan raised the sales tax to 10% from 8% on Oct. 1, a move that is seen as critical for fixing the country's tattered finances.

But recent weak data on exports and factory output as well as impacts from the tax hike suggest the economy could shrink in the fourth quarter.

Weak household spending also bodes ill for the economic recovery, with some analysts expecting consumer spending to contract in the current quarter.

Sluggish wage recovery is adding to worries about private spending, with inflation-adjusted real wages declining at their fastest pace in four months in November.

A central bank survey showed Japanese households' confidence in the economy sank to a five-year low in the three months to December.

Japan launched a $122 billion fiscal package last month to support stalling growth and as policymakers look to sustain activity beyond the 2020 Tokyo Olympics.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Try 1 month for $0.99

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends July 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to Nikkei Asia has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media

Nikkei Asian Review, now known as Nikkei Asia, will be the voice of the Asian Century.

Celebrate our next chapter
Free access for everyone - Sep. 30

Find out more