Japan Household Spending:

 Article Source: https://mainichi.jp/english/articles/20220708/p2g/00m/0bu/014000c

Article: 

TOKYO (Kyodo) -- Japan's household spending in May fell a real 0.5 percent from a year earlier, declining for the third straight month, as car sales were sluggish due to a supply crunch, the government said Friday.

Average spending by households with two or more people stood at 287,687 yen ($2,100), according to the Ministry of Internal Affairs and Communications. Still, the decline was modest as people spent more on eating out and travel on the back of the first Golden Week holidays since the pandemic began without any COVID-19 restrictions.

Ideas:

Japan's household spending most likely will continue to be sluggish as prices continue to increase. 

Even though consumers can get out and aboout more they might be somewhat cautious because of increasing costs.

But Japanese consumers, for the most part, have always been more cautious on spending compared to western consumers.

A real 0.5 percent decline might not be that much as it might be related to just less after the Golden Week holiday period and or a combination including an increase in prices.

Article:

"We consider it almost unchanged from a year earlier," a ministry official said of the May headline figure. "Overall, the impact of rising prices on household spending remained limited."

On a seasonally adjusted basis, spending shrank 1.9 percent from April, when it increased on clothing and shoes ahead of the weeklong holidays through early May.

By category, spending on transportation and communication dropped 2.3 percent from a year earlier, down for the second straight month, amid curbed auto production due to global chip shortages and Shanghai's COVID-19 lockdown.

Ideas:

Yes, a 0.5 percent decline is not that much and maybe should just be seen as not that big a problem.

And yes maybe less spending might have nothing to do with an increase in prices, at this time, but as prices continue increase consumers might begin to feel more hesitant about spending on some products.

Consumer spending n Japan is always a hit or miss situatoin becasue you never really know the real reasons for less spending. 

Is it just the Japanese consumer character to not spend as much as their western counterparts or is it because of an increase in prices or is it because the average Japanese worker hasn't received a wage increase in a very long time.

Article:

Food consumption fell for the fourth month in a row, down 0.5 percent, amid rising prices of vegetables and fishery products.

Meanwhile, outlays on culture and recreation, including package tours, increased 9.2 percent. Spending on restaurants, a sub category under food consumption, rose 37.4 percent.

Ideas:

So even though it was only a 0.5 decrease it is related to an increase in prices. Maybe yes and maybe no.

But it looks like getting out and about and traveling saw a real increase of 9.2 percent. But it must be remembered this is on the back of not much travel in 2021.

And yes, as restuarants were able to stay open much longer and serve alcohol again an increasse of 37.4 percent is a weclome relief and also maybe restaurants haven't increased their prices too much yet. 

Article:

The average monthly income of salaried households with at least two people in May declined a real 2.7 percent to 489,745 yen, the ministry said.

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

Ideas:

So what is the reason for the decline in montly income. Is it becasue of less overtime, is it because of  companies reducing work hours or salaries. Is it an industry situation where new jobs or job salary increases were less than before.

Consumer spending or private consumption, whatever phrase you want to use, is much less in Japan than other advanced economies. 

In other advanced economies consumer spending might be more than 60 percent of GDP.

In Japan it might be a little too low to really have an impact on economic growth. 

If there is maybe a 5 percent increase in consumer spending overall then maybe there would be some significant economic growth in Japan.

Of cousre that might not happen unless companies begin to increase salareis like Prime Minister Kishida suggested back in December of 2021.

But also becasue of raw material price increases and energy cost increases companies might not be able to increase wages at this time.

Have a nice day and be safe!