Japan retail sales in October falls 0.1% year/year

 



Japanese retail sales inched down in October from a year before, falling for the eighth straight month, as consumers remain cautious about spending amid sluggish wage growth, though the decline was smaller than in previous months.

According to the Ministry of Economy, Trade and Industry report, Japanese retail sales went down for an eighth month running in October, however, the fall was much smaller than expected in a sign the economy was showing positive signals in the fourth quarter. Retail sales dropped at an annualized 0.1% last month, following a 1.7% drop in September.

A median estimate of economists called for a 1.5% year-over-year decline. Japan's unemployment rate was unchanged in October, while job availability advanced slightly, pointing to continued strength in the domestic labour market. As data shows, the unemployment rate came in at 3% in October, unchanged from the previous month. A median estimate of economists also called for no change.

Even though the retail sales fell 0.1% from a year before, according to data released Tuesday by the Ministry of Economy, Trade and Industry. Month-on-month figures, however, showed an increase in retail sales of 2.5% after seasonal adjustment, for a second month of gains, pointing to some recent improvement in the trend.

To stimulate consumption, Prime Minister Shinzo Abe enacted an economic stimulus package in October and is now urging corporations to give generous wage raises ahead of annual pay negotiations with labor unions next year.

Private consumption, which represents roughly 60% of gross domestic product (GDP), expanded just 0.1% in the third quarter, a government report revealed earlier this month. That was unchanged from April-June. It also pointed to weak underlying momentum despite the economy expanding at a much faster than expected 2.2% annually in the third quarter.

Separate data released Tuesday also showed an eighth straight drop in household spending, which fell 0.4% from a year earlier in October, according to data released by the Ministry of Internal Affairs and Communications.

Later on this week, the Japanese government is expected to release reports on industrial production, housing starts as well as foreign bond investment.