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Japan household spending down 4.0% in August; spending on services hit hard

October 1, 2008
By Ken Worsley


Given the torrential rains over the last ten days of August, I expected household spending to fall much further than the 0.5% slide we saw in July. Forecasts had called for something along the lines of a 1.3% reduction in household spending in August, and since forecasts have generally been below the dip in spending so far this year, it seemed safe to expect a 1.5%-2.0% fall in August.

However, data released today by the Ministry of Internal Affiars and Communications shows a 4.0% fall in Japan’s August consumer spending. This makes August the sixth month in a row that household spending has fallen in Japan.

Average spending at households with two or more persons came to 291,154 yen, down 4.0% from a year ago, while spending at households with a worker as head of household fell 1.9% to 322,501 yen. The only nugget of good news in the report was that wages at workers’ households rose 1.9% to 488,216 yen in August.

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

  • Transportation & communication: 40,588 yen (+0.7%)
  • Housing: 15,275 yen (-12.3%)
  • Education: 7,333 yen (-10.6%)
  • Other: 71,132 yen (-7.6%)
  • Medical care: 12,521 yen (-3.6%)
  • Culture & recreation: 32,800 yen (-3.4%)
  • Fuel, electric and water: 20,226 yen (-2.4%)
  • Food: 70,909 yen (-2.2%)
  • Furniture & Household Goods: 10,425 yen (-0.7%)
  • Clothing & footwear: 9,945 yen (-0.5%)

Clearly, spending declines were seen in 9 of the 10 categories. Last month, they were evenly split, with rises seen in five and declines in five. The big declines compared to July are the declines in spending on furniture, household goods, housing and clothing.

Here is our table tracking spending on major categories:

Goods and Services Goods Only Durable & Semi Durable Goods Services Only
December 2007 +2.34% +0.99% +.97% +4.20%
January 2008 +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%
August +1.01% +0.03% +3.01% -5.87%

Spending on goods continued to grow in August, with purchases of durables and semi-durables again faring better than overall spending on goods. Spending on services, however, took a big hit. This category has now been negative for six of the eight months seen so far this year.

Filed Under Economic Reports, Household Spending 

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Comments

3 Responses to “Japan household spending down 4.0% in August; spending on services hit hard”

  1. Local governments employing more temp workers, average wages down, job offers per applicant shrinking Japan Economy News & Blog - Business, Economy, Marketing and Economic Reports on October 2nd, 2008 12:33 am

    […] The only bright spot in all this was what was reported here yesterday: that at households where the head of the household is a salaried worker, average household income was up 1.9% in September. […]

  2. J on October 12th, 2008 7:44 pm

    now that oil is down, will Japan reduce prices on milk, bread,etc. which it used as an excuse to raise prices? NO> the same shit happened with the vending machines. in about 1998 when the yen was 140 something to the dollar they used it as an excuse to raise prices to 120 yen and above, after the Yen soon came down did the price? NO the Japanese will use anything to raise prices because it is the only way they can extort money out of the Japanese

  3. redbird on October 12th, 2008 10:30 pm

    Of course the prices won’t come down. That’s the point! Do you think the fuel surcharges are going to come down?

    When companies are run on credit, they cannot survive on business.

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