• Home
• About/Contact
• Economic Reports
• Research
• Advertising

• Business
• Economics
• Reports
• Finance
• Marketing
• Politics
• Real Estate
• Services
• Retail
• Tech

Subscribe

Japan’s household spending down 0.6% in November, Wages down 2.1%, Retail sales up 1.6%

After we saw a 0.6% rise in household spending in October, purses tightened across the nation in November, and household spending fell by 0.6 percent to 282,836 yen, according to data released by the Statistics Bureau on Friday. September had seen a much more encouraging 3.2% growth in household spending.

Despite the decline in household spending, we also learned that retail sales increased 1.6% in November, which means that they have now been on the rise for four consecutive months. The news was not necessarily rosy for all retailers, as the push in sales was driven by higher gasoline and fuel prices. At large retailers, sales were up 0.4 percent.

Back to the households: In October, we had seen a rise of 0.4% in income at workers’ households with two or more people. In November, however, household income fell by a worryingly fat 2.1 percent. With oil and gasoline prices still high, and December being a colder month, it’s hard to imagine that retailers will be seeing an increase in expenditure for December.

Broken down by category, we saw spending on Transportation and Communication with the biggest fall, declining 12.9% in November. Six of the ten categories showed a decline:

Transportation and Communication: -12.9% (35,001 yen)
Furniture and Household Utensils: -1.6% (10,227)
Housing: -1.4% (16,882)
Food: -0.9% (65,751)
Clothing and Footwear: -0.5% (14,292)
Fuel, Light and Water: -0.2% (20,245)

Culture and Recreation: +0.1% (29,180)
Medical Care: +1.7% (13,917)
Education: +3.1% (10,342)
Other: +6.2% (66,998)

A few things are interesting about these numbers, especially when we look at how consumer prices changed in November. First, we already know that utility prices increased 2.2% in November. Yet, we’re seeing less being spent in that category in the same month. Of course, I don’t have the weather data in front of me, but I think it was a warm November. The heaters at my house didn’t get turned on until after December 1, so this could be the case. At the same time, we might have a general expectation that heating costs will be high this winter and thus households are trying to be careful with energy use. This would certainly be a good sign.

We see a similar effect with transportation and communication prices and spending. In November, spending in this category was down 12.9 percent despite prices having risen 1.5 percent. Finally, we see the same thing happening with spending on clothing and footwear, which decreased 0.5 percent in November despite a 0.7 percent increase in spending.

Nonetheless, those three could all be explained away. The category that perhaps shows the most interesting spread is food expenditures. In November, food prices were up 0.9 percent. The increase in food prices has been much talked about and is expected to continue into 2008. Spending on food, however, declined 0.9 percent.

We’re not going to assume that people are eating much less. After all, it is the winter, and if families are being more frugal with energy costs, they’re going to have to burn some calories to stay warm. But seriously, we must wonder if shoppers are turning to cheaper food brands or food shops. Of course, supermarket sales fell yet again in November, by 0.4 percent - showing a decline for the 23rd consecutive month and for 44 of the last 45 months.

Although we haven’t posted that data here yet, we will do so soon, because it relates to another story we’ve been watching. However, what really interests us is that sales of food at Japan’s supermarkets actually rose 0.4% in November, according to the Japan Chain Stores Association. Total sales fell at supermarkets because sales of clothing and other items fell (this is the only part that makes sense so far). Additionally, food sales at department stores were reported to have been up 3.0 percent in November.

There you have it: Food prices rose 0.9 percent in November, while household spending on food fell 0.9 percent. At the same time, sales of food at supermarkets rose 0.4 percent, while food sales at department stores increased by 3.0 percent…

And now I’m hungry.

Comments

Copyright © 2006-2008 Japan Economy News

Disclaimer