Japan August household spending rises for 9th month, but wages fall

Mixed data keeps BOJ under pressure for more easing Fraud trial hears

TOKYO, Oct 8, (RTRS): Japan’s household spending rose for a ninth straight month in August, offering some relief for the exportdependent economy amid weak global demand and a protracted US-China trade war.

But separate data on Tuesday showed wages fell for an eighth consecutive month, pointing to further strains on consumers as the government hiked the sales tax this month.

The mixed readings will keep policymakers under pressure to announce more fiscal and monetary stimulus measures to shield the economy from a recession, analysts say.

Household spending in August rose 1.0% from a year earlier, accelerating form a 0.8% increase in July but falling short of a median market forecast for a 1.2% increase, government data showed.

The ninth consecutive month of gains was the longest such streak since comparable data became available in 2001.

“Consumption appeared to have been fairly strong in August after weak spending in July, when bad weather kept consumers at home,” said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute.

Growth

“But the outlook isn’t bright. Wage growth is weak and the effect of October’s sales tax hike will begin to show. Consumer sentiment has been pretty gloomy, which means risks to the outlook are tilted to the downside.”

Japan rolled out a twice-delayed increase in the sales tax to 10% from 8% on Oct 1, a move considered critical for fixing the country’s tattered finances.

While the government has taken steps to ease the burden on consumers by offering vouchers and tax breaks, there are fears the higher tax could hurt an economy already feeling the pinch from global pressures.

Real wages adjusted for inflation fell for an eighth straight month in August, raising concerns for private spending.

Japan’s jobless rate remains at record-low levels, but job offers are slowing in a sign the fallout from the trade tensions is broadening.

Upcoming data could be hard to read as households may have made purchases ahead of the sales tax increase, which will inflate consumption data up till September and may lead to a downturn in spending from October onward, analysts say.

The strength of consumption and capital expenditure will be crucial to the Bank of Japan’s decision on whether to loosen monetary policy at its rate review on Oct 30-31.

The central bank has said while robust domestic demand is making up for the weakness in exports, it stands ready to act if risks heighten enough to derail Japan’s recovery.