Business / Economy

Japan's household spending remains weak in August despite low jobless rate

Kyodo

Household spending fell for the sixth straight month in August, reflecting weak consumer sentiment, though the unemployment rate remained low at 3.1 percent, up 0.1 percentage point from the previous month, government data showed Friday.

Average household spending, a key indicator of private consumption, fell a seasonally adjusted 4.6 percent in August from a year earlier to ¥276,338, partly reflecting unstable weather conditions, the Ministry of Internal Affairs and Communications said.

Housing-related outlays such as renovations plunged 16.8 percent, while expenditure on clothing slid 12.9 percent. Spending for transportation and communications dropped 7.3 percent.

Meanwhile, the nation’s core consumer price index for August fell 0.5 percent from a year earlier, the ministry said.

The result matched the median forecast among 20 economic research institutes surveyed by Jiji Press.

The core CPI, which excludes often volatile fresh food prices, stood at 99.6 against 100 for the base year of 2015. Month on month, the index was unchanged.

A ministry official said household spending was hurt by the arrival of typhoons in the reporting month, but maintained the view that household spending remains weak.

“The sense of uncertainty has risen, as corporate profits have been eroded due to a firming yen,” said Keisuke Okamoto, an economist at the Daiwa Institute of Research. “If companies are unable to make profits, wage growth will be sluggish and may increase feelings of job insecurity.”

A further delay in hiking the consumption tax may work positively in the short term, but consumers cannot go on a spending spree as a future tax increase is unavoidable in the long term and people want to save their money, Okamoto said.

The income of salaried households rose 1.5 percent in real terms to ¥480,083.

Reflecting tight labor conditions, the country’s job availability remained unchanged at 1.37 in August, meaning 137 positions were available for every 100 job seekers, according to the Ministry of Health, Labor and Welfare.

Employment conditions deteriorated for the first time in six months, but another ministry official said the employment situation “remains on an improving trend,” saying the jobless rate is still at around a 21-year low.

The unemployment rate for women was unchanged at 2.7 percent, while that for men increased 0.2 percentage point to 3.4 percent, the internal affairs ministry said.

The number of unemployed people rose a seasonally adjusted 4.5 percent, or 90,000, to 2.1 million. The number of workers dipped 0.2 percent, or 120,000 to 64.64 million.

The number of people leaving jobs voluntarily stood at a seasonally adjusted 880,000, up 1.1 percent, or 10,000.