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Japan household spending down 0.5% in July; durables up, services down

September 2, 2008
By Ken Worsley


According to the Ministry of Internal Affairs and Communications, Japan’s average household spending fell by 0.5% in July. Once again, the drop was smaller than had been generally forecasted. However, it does represent the fifth consecutive month in which household spending has fallen year-on-year.

Average spending at households with two or more persons came to 298,366 yen, down 0.5% from a year ago, while spending at households with a worker as head of household fell 0.1% to 330,483 yen. At the same time, wages at workers’ households fell 3.5% to 587,732 yen in July.

In terms of spending at households with two or more persons, here’s a breakdown by category:

  • Furniture & Household Goods: 12,700 yen (+13.6%)
  • Housing: 19,430 yen (+9.0%)
  • Culture & recreation: 31,851 yen (+3.6%)
  • Clothing & footwear: 13,702 yen (+3.2%)
  • Education: 9,801 yen (+3.1%)
  • Medical care: 13,124 yen (-0.3%)
  • Transportation & communication: 42,109 yen (-1.7%)
  • Food: 68,150 yen (-2.4%)
  • Other: 68,882 yen (-4.0%)
  • Fuel, electric and water: 18,618 yen (-5.8%)

Compared to last month, we see big gains in spending on furniture, household goods, housing and clothing. In fact, it looks like we’re seeing quite a bit more discretionary spending than spending on necessities. The data itself backs this up: Discretionary spending was up about 1.4% while spending on daily goods fell by about 3.9%.

Here is our table tracking spending on major categories:

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%
June +1.08% +1.31% -1.92% +0.75%
July +0.20% +0.56% +2.25% -0.29%

Although spending on goods grew, it grew at a much slower pace than the previous two months. Spending on semi-durables and durables made a swing back to positive territory, though this also happened back in May. It will be interesting to see if such spending holds up. On the other hand, spending on services returned to negative territory, as it has been for much of this year.

Thus, household spending on food, fuel and utilities continues to decline despite persistent price inflation in year-on-year terms. Although we’re seeing gasoline prices come back down, they will still be higher on the year for some time. The government still apparently intends to raise the price of imported wheat despite the recent decline in prices. Another issue for another time…

Filed Under Economic Reports, Household Spending 

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Comments

One Response to “Japan household spending down 0.5% in July; durables up, services down”

  1. Saag on September 4th, 2008 7:49 pm

    So households are spending more on non-necessary items than what they need for day to day living, despite price increases? Could it be that the prices of these non-necessary items are rising faster than food or fuel?

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