Japan’s retail sales fell for the first time in three months, signaling that consumer spending is struggling to maintain traction.

KEY POINTS

• Retail sales fell 1.1 percent in August from the previous month, when they rose 1.5 percent, according to a trade ministry report released on Thursday.
• The median forecast of economists surveyed by Bloomberg was for a 0.6 percent drop.
• Compared with a year earlier, they fell 2.1 percent (forecast -1.7 percent).
• Sales of department stores and supermarkets fell 3.6 percent from a year earlier (forecast -2.6 percent).

BIG PICTURE

The latest figures underscore the challenge Prime Minister Shinzo Abe faces in stoking economic growth and inflation. Even with the unemployment rate at the lowest level in years, slow growth in wages is limiting consumer spending, which accounts for about 60 percent of Japan’s economy. The release on Friday of data for employment, household spending, industrial production and inflation will give a more complete picture of how the economy performed last month.

ECONOMIST TAKEAWAYS

• “Consumer spending remains weak,” Atsushi Takeda, an economist at Itochu Corp. in Tokyo, said before the report was released. “There are weak expectations that income will improve in the future, so households are cutting down on their spending.”
• “There were fewer weekends in August this year compared with July and August last year, meaning fewer shopping days caused consumers to spend less,” Takeda said.
• “Private consumption is flying on only one engine because wage growth is failing to gain momentum even though job conditions are improving. So, the pace of the recovery isn’t that strong,” Hiroaki Muto, chief economist at Tokai Tokyo Research Center in Tokyo, said before the report was released.
• “A delay in the sales-tax hike to October 2019 and a boost from an economic stimulus package may support consumption later this year,” Muto said.

Source:
courtesy of BLOOMBERG

by Keiko Ujikane

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