Japan Household Spending: Updated Jan. 22

 Artcle Source:     https://mainichi.jp/english/articles/20220107/p2g/00m/0bu/031000c

Article:

TOKYO (Kyodo) -- Japan's household spending fell a real 1.3 percent in November from a year earlier for the fourth straight month of decrease, reflecting lower expenditure on food and energy as more people went out amid a fall in new coronavirus cases, the government said Friday.

Average spending by households with two or more people was 277,029 yen ($2,400), the Ministry of Internal Affairs and Communications said.

Following the complete lifting of the coronavirus state of emergency on Oct. 1, daily new COVID-19 cases remained low in the reporting month and more people went out. The Omicron coronavirus variant was first confirmed in Japan on Nov. 30.

Ideas:

Perhaps another reason for the decreases in spending on food and energy was the increase in prices in both areas. As supermarket prices on food has been increasing and the increase in home energy prices have been increasing again perhaps consumers are spending or using less in those areas.

Of course yes, some consumers might have gone out more which means less use of energy at home and less supermarket buying as they went to restuarants instead, and still as companies might have required their workers to start working again in the offices instead of at home.

In October and November, as Japan had less virus cases than other countries there was always a qustion, at the time, as to why Japan so much lower than other countries. 

But whatever reasons some might have had, they don't matter much as of this writing cases in Japan are at record levels.

Article:

"Since opportunities to go out increased, spending on transportation and clothes expanded, but stay-at-home demand fell and expenditure on food and electricity was lower," a ministry official told reporters.

By component, spending on food such as vegetables, seafood and meat declined 3.0 percent from a year earlier as more people dined out rather than cooked at home.

Although spending on eating out has shown some recovery, it fell 3.0 percent from a year earlier, contributing to the overall decline in food expenditure, following a 4.0 percent drop in October.

Ideas:

There are always many factors into what is going on in an economy and there are many positives and negatives interacting at the same time.

For example, while some people might have gone out more because the emergency measures were being lifted, some might have gone out because home energy prices were getting too high.

And the same can be said for supermarket shopping. As prices at supermarkets were increasing some customers/consumers might have decided to eat out instead of buying at supermarkets and again because of the decreased emergency measures all interacting at the same time.

As companies might have required their employees to return to work there of course would have been more spending on transportation.But then again as gasoline prices were inceasing, before the government's plan to release oil reserves, more people might have taken public transportation instead of using their cars.

Article:

The pace of decrease for such spending was slower than those logged under the state of emergency, when restaurants were asked to close earlier and refrain from serving alcohol. In September, expenditure on dining out plunged 20.1 percent on year.

Outlays on energy and water bills dropped 7.1 percent, led by falls in electricity bills as people spent less time at home.

Spending for housing decreased 15.8 percent in reaction to the previous year's expansion. When housing expenses and other volatile factors such as money given for gifts are excluded, overall consumption was nearly flat from the previous year at a 0.7 percent decline, the official said.

Ideas:

As always there are a lot of variables or factors all interacting at the same time. So yes, as spending at supermarkets might have been decreasing as more people went out to eat, so its understandalbe that spending at restaurants was increasing or not falling as much. 

Home energy prices were actually increasing so that also might have had been a factor in households not using as much energy at home and maybe again companies were asking their employees to come back to the office, which mean less use of energy at home.

Overall consumers spending in Japan has always been a challenge. And now add in the pandemic situation it complicates the situation.

In the spring of 2020, there might have been a lot of spendng on household products including big ticket products such as air-conditioners, new TV's, new refrigeratiors and so on, as more people stayed at home and ate more at home and watched more TV etc.

And more consumers might have increased their spending online at Amazon Japan, Rakuten or even Yodobashi camera for many items. And maybe women might have spent more online at Uniqlo, H&M, Zara, and Gap for example.

Article:

Meanwhile, spending on clothing and footwear climbed 8.9 percent, led by women's coats as the temperature fell in late November. Transportation spending, including rail fares and expressway tolls, grew 5.8 percent.

On a month-to-month basis, spending in November fell a seasonally adjusted 1.2 percent from October, down for the first time in three months.

The average monthly income of salaried households with at least two people advanced a real 1.1 percent in November from a year earlier to 481,838 yen, rising for a fourth consecutive month.

Household spending is a key indicator of private consumption, which accounts for more than half of Japan's gross domestic product.

Ideas:

As more women and men went back out, maybe they felt the need to finallly get some new clothes as they were only staying mostly at home.

But as the weather turned colder new coats and other winter clothes sales most likely surged a lot. And as the winter has been unusually cold in Japan most likely clothes stores might see a surge in sales in Q4 for 2021 and Q1 in 2022.

And as expected transportation usage increased as companies asked or told their employees to return to work and or more people felt comfortable using public transportation instead of using their cars.

And at the same time, again many factors interacting at the same time, gasoline prices were increasing a lot and consumers felt public transportation was a cheaper alternative, using the supply/demand approach of buyers will seek out substitutes if prices get too high as maybe some consumers are sensitive to price increases.

Consumer spending as always been a major challenge for the Japanese economy. Perhaps its because Japan has always been a savings culture as opposed to a free-wheeling spending culture of the US. And then there is the ageing situation where the 65+ age groups tend to spend less compared to the younger groups. 

Also it might be that up to 30 percent of the Japanease workforce might be part-time workers or contract workers and are not full-time full benefit workers which might put some constraints on how much they can spend in the Japanese economy.

Consumer spending in the Japanese economy might only be at the 50 percent level of its GDP, while in the US and Europe its has much as 60 percent or more of GDP which might be a factor as to why consumer spending never reaches the level the Bank of Japan wants to see which of course inhibits the BOJ's plan of getting to the 2.0 consumer inflation rate.

Have a nice day and be safe!