• Kyodo

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Japan’s household spending fell a real 1.9% in September from a year earlier, down for the second straight month, as consumption was affected by sluggish car sales and a prolonged state of emergency over the coronavirus pandemic, government data showed Friday.

Average spending by households with two or more people in real terms stood at ¥265,306 ($2,330), according to the Internal Affairs and Communications Ministry. It declined 3.0% in August.

By component, transportation and telecommunication outlays shrank 6.5%, contributing the most to the overall decrease. Spending on cars has been slow recently amid a global semiconductor crunch and parts supply disruptions resulting from virus infection surges in Southeast Asia, which have forced automakers to cut output.

A 3.5% fall in expenditures on food including dining out under the nation’s monthslong virus emergency through the end of September also weighed on overall consumption.

In an effort to curb a coronavirus resurgence driven by the highly contagious delta variant, the measure targeted 21 out of Japan’s 47 prefectures, including Tokyo, at the beginning of September. Under the emergency, people were requested to stay at home and restaurants and bars were asked to close early and not serve alcohol.

On a seasonally adjusted basis, however, September spending rose 5.0% from August in real terms, the first increase in five months, as the country saw a remarkable drop in the number of new virus infections following its peak in late August, although the emergency declaration remained in place.

Amid steady progress in the government’s vaccine rollout, the decrease in virus cases led the latest state of emergency to be fully lifted on Oct. 1 and restrictions on economic activities to be gradually eased.

“The situation over the virus is getting better, but household spending is unlikely to recover rapidly since the government has been relaxing (anti-virus measures) in stages,” a ministry official told reporters.

As for other categories, outlays for entertainment services decreased 8.6% from a year before, with those for domestic and overseas package tours still weak. In the same month a year earlier, the state-subsidized Go To Travel campaign boosted such spending to some extent.

The program to boost the virus-hit domestic tourism sector has been suspended nationwide since December, when the nation was seeing an expansion in COVID-19 cases. Prime Minister Fumio Kishida has said the government will consider resuming it following a recent sharp drop in infections.

Meanwhile, housing expenditures rose 5.3%, with the official saying that outlays on rent have been rising, especially in the Tokyo metropolitan area, as an increasing number of people are moving in search of space and comfort with the pandemic having forced them to spend more time at home.

The average monthly income of salaried households with at least two people rose a real 2.5% to ¥481,800 in September, up for the second consecutive month.

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

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