ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailMenu BurgerPositive ArrowIcon PrintIcon SearchSite TitleTitle ChevronIcon Twitter
Economy

Japan's June household spending rises for 7th straight month

Consumers remain resilient despite 6th consecutive monthly fall in real wages

Japanese spending is giving hope to the Bank of Japan that it can reach its target of 2% inflation.

TOKYO (Reuters) -- Japan's household spending rose for a seventh consecutive month in June, suggesting resilient consumer spending could help counter the effects of weak global demand, but falls in real wages cloud the outlook for overall domestic consumption.

The Bank of Japan is hopeful that a pick-up in private consumption will help it to achieve its 2 percent inflation target even as an intensifying U.S.-China trade war and tensions with South Korea hurt exports and business sentiment.

Household spending in June rose 2.7% from a year earlier, nearly double the median forecast for a 1.4% gain, government data showed on Tuesday.

In May, spending rose at the fastest pace in four years, in a sign improving domestic demand will offer some support for an economy facing growing external pressure.

From the previous month, household spending declined 2.8% in June, which compared with a median estimate for a 3.0% drop.

There were some areas of concern about the outlook. Separate data showed real wages in Japan adjusted for inflation slipped for a sixth straight month in June, which could undermine domestic consumption ahead of a planned sales tax hike in October.

Japan plans to increase the sales tax to 10% this October, unless there is an economic shock on the scale of the collapse of Lehman Brothers, officials say.

Some policymakers worry the tax hike will further damage consumer sentiment and hurt an economy already under pressure from the U.S.-China trade war and slowing global demand.

The Bank of Japan last week held off expanding stimulus but committed to doing so "without hesitation" if a global slowdown jeopardises the country's economic recovery.

Recent yen appreciation and falls in share prices could fuel speculation for further central bank monetary easing.

Japan's economic growth likely slowed in April-June as cooling global demand and trade tensions weighed on exports, but brisk domestic demand offset some of the external pressure, a Reuters poll showed.

The government will announce the growth data on Friday.

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.

Get Unlimited access

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 October 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 the Nikkei Asian Review 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