Japan’s retail sales regained ground in September following a sharp drop the month before, an indication that shoppers felt more comfortable spending as virus infections started to fall from August’s peak.
Higher outlays on clothing, accessories and general merchandise helped receipts at retailers rise 2.7% from the previous month, the economy ministry data reported Thursday. Analysts had expected a 1.5% increase from August.
Sales gained 1.2% in the quarter compared with three months earlier, the fastest increase in a year.
The stronger-than-expected gain suggests overall consumption, the biggest component of the economy, may not have declined last quarter as much as expected. Signs of resilience in the recovery could reduce the scale of a stimulus package to be put together after this weekend’s general election.
Recently installed Prime Minister Fumio Kishida has so far spoken of measures worth tens of trillions of yen to help the post-pandemic recovery if his party wins Sunday’s vote, as is expected.
“Purely looking at the retail numbers, you can sense resilience in consumption,” said economist Takeshi Minami at Norinchukin Research Institute. He cautioned, however, that the report gives an incomplete picture of shopping patterns, which looker weaker in household spending data. Higher gas prices may have boosted the retail numbers, he said.
Economists surveyed by Bloomberg expect a fall in consumption stemming from summer’s COVID-19 wave and forecast an extended state of emergency will almost halve overall economic growth in the three months to September.
Still, September’s retail report indicates the worst may be over for a consumption slump that has slowed the economy’s rebound from the pandemic.
The lifting of the emergency late last month is likely to boost sales at restaurants, bars and retailers this quarter. Tokyo also lifted all restrictions on operating times for accredited restaurants and bars this week, sending an important signal to households that it’s safe to return to some semblance of normal life.
With about 70% of the country fully vaccinated, Japan’s inoculation rate has surpassed the U.S. and many European countries. With new cases now below 100 a day for more than two weeks in the capital, the new administration could potentially reintroduce last year’s Go ToTravel tourism campaign to help boost domestic spending as part of its stimulus package.
A consumption revival is key for Japan’s recovery now that the country’s traditional growth engines of factory production and exports are showing signs of weakness amid global supply chain snags.
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