Japan's household spending rebounds from initial Covid-19 hit

[TOKYO] Japan's household spending rose in October for the first time in over a year, government data showed on Tuesday, a sign the economy was gradually emerging from the damage caused by the first wave of coronavirus infections.

But a recent resurgence of infections cloud the outlook for the world's third-largest economy, keeping policymakers under pressure to support a fragile recovery with massive monetary and fiscal stimulus measures.

Household spending increased 1.9 per cent in October from a year earlier after 12 months of declines, compared with a median market forecast for a 2.5 per cent gain.

A government campaign offering discounts to domestic travel, which critics say may have helped spread infections, propped up otherwise weak spending on services, the data showed.

Households also increased spending on durable goods like automobiles, highlighting the contrast between robust demand for goods and continued sluggishness in service consumption.

The government is likely to compile on Tuesday a fresh stimulus package sized around 73 trillion yen (S$935.39 billion) to cushion the blow from Covid-19, according to Japanese media reports. That would follow a combined US$2.2 trillion from two previous packages.

The Bank of Japan is also set to maintain its massive stimulus programme for the time being, and consider extending a range of schemes aimed at easing corporate funding strains as early as its rate review next week.

REUTERS