Japan household spending seen tumbling y-o-y as pandemic lingers: poll

[TOKYO] Japanese household spending likely slumped by nearly 11 per cent in September from a year earlier, a Reuters poll showed on Friday, dashing hopes for a robust rebound from a coronavirus-induced slump.

The spending data due at 8.30am Nov 6 (11.30pm GMT Nov 5) follows data on Friday that showed a bigger-than-expected rise in factory output while job availability hit the lowest level since late 2013.

The mixed data underscores the challenge for policymakers to revive economic activity while preventing a resurgence of infections. Prime Minister Yoshihide Suga is set to order next week a plan for extra stimulus steps.

All household spending likely fell 10.7 per cent in September from a year earlier in price-adjusted real terms, the poll of 13 economists found, a bigger drop than the prior month's 6.9 per cent dip.

On the month, household spending probably rose 2.2 per cent in September, accelerating from the prior month's 1.7 per cent gain on a seasonally-adjusted basis.

"Consumption is seesawing, though the government's travel discount campaigns have encouraged people to go out, shaking off self-restraint sentiment seen prevalent in summer," said Takeshi Minami, chief economist at Norinchukin Research Institute.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

"That said, the last-minute spending spree in September last year to beat the October 2019 sales tax hike probably caused a big pull-back in demand." The Bank of Japan trimmed its economic growth and inflation forecasts for the current fiscal year on Thursday but offered a more upbeat view on the recovery outlook, signalling that it has delivered enough stimulus for the time being.

The world's third-largest economy is bottoming out from its worst postwar slump in the second quarter due to a rebound in exports and factory output. Still, weak private consumption and capital spending is seen to put a drag on any economic recovery.

REUTERS