Japan’s household spending down 3.2% in May - Spending on services slid 7.64%

June 30, 2008
By Ken Worsley

Prior to the release of May’s household spending figures, a Kyodo News survey forecasted a 2.2% fall in spending. The results, however, were worse than expected: According to data released Friday by the Ministry of Internal Affairs and Communication, Japan’s household spending fell 3.2% in May.

May was thus the third consecutive month with a fall in consumer spending, following April’s 2.2% decline and a drop of 1.6% in March. According to the Statistics Bureau, spending at households with two or more people came to 288,128, down 3.2% from a year ago. Income at households with a salaried worker as head of household came to 435,076 yen, which was down 0.6% from a year ago, while spending at workers’ households was at 315,152 yen, down 0.9% from last year.

Here’s a breakdown of spending per category, along with changes against May of last year:

Education: 12,699 yen (+6.4%)
Transportation & communication: 37,613 yen (+2.2%)
Furniture & Household Goods: 8,792 yen (+0.6%)

Medical care: 11,721 yen (-11.2%)
Housing: 16,696 yen (-9.7%)
Fuel, electric and water: 21,174 yen (-6.3%)
Other: 65,111 yen (-5.8%)
Clothing & footwear: 12,762 yen (-4.9%)
Culture & recreation: 31,691 yen (-3.0%)
Food: 69,870 yen (-1.7%)

As last month, we see an increase in three categories and a decrease in seven. Two categories switched sides: In April, Culture & recreation had been up 5.0% while spending on education was down 5.6%. As in April, both energy and food spending showed declines, despite their raises in prices.

Last month we speculated that households must be trimming their energy and food budgets. Supermarket spending reports should be cross-referenced to see if there has been a change in food spending habits. Recent media reports hint that spending on rice, the price of which is kept artificially steady, may increase as households back off from buying pasta and bread. Also, it should be noted that while supermarket and department store spending continues to decline, overall retail sales were up 0.2% in May, showing an increase for the tenth straight month.

As we did in the last two months, let’s take a look at how spending on durable and semi-durable items fared in May:

	Goods and Services	Goods Only	Durable & Semi Durable Goods	Services Only
December	+2.34%	+0.99%	+.97%	+4.20%
January	+4.39%	+2.98%	+8.09%	+6.40%
February	+1.30%	+4.76%	-3.65%	-3.28%
March	-0.90%	-0.51%	-10.41%	-1.43%
April	-1.16%	-0.10%	-6.56%	-2.35%
May	-1.94%	+2.68%	+8.26%	-7.64%

This is quite a change from April’s numbers. Spending on goods has recovered, with spending on durables shooting up 25.3% over May of last year. Spending on semi-durables, however, still dragged, showing a -0.8% change. Together, spending on durables and semi-durables accounted for 38,814 yen in May.

Spending on services took the biggest hit, sliding 7.64% to 106,902 yen. In February of this year we saw spending on services slide below the 100,000 yen mark, and it’s looking as though that might be possible again in June - a decline of 3.75% or greater in services will pull spending below the 100,000 yen level for the month.

According to the data, spending on “social expenses” such as weddings and funerals dropped 5.8% from May 2007. This sounds like bad news for the nation’s luxury wedding providers, unless couples are simply putting off getting married until job conditions are more secure – and that might be some time yet.

Filed Under Economic Reports, Household Spending