Japan household spending down 2.4% in September; Spending on services back in the black

November 5, 2008
By Ken Worsley

In August, Japan’s household spending fell by a steep 4.0% against a year earlier. As those figures were driven down in part to inclement weather, we did not expect to see September’s numbers show such a large reduction from the previous year. According to data released late last week by the Ministry of Internal Affairs and Communications, household spending fell 2.3% in September. Thus, September was the seventh consecutive month in which household spending dropped on a year-on-year basis.

Average spending at households with two or more persons came to 281,433 yen, down 2.4% from a year ago, while spending at households with a worker as head of household fell 3.4% to 307,778 yen. Meanwhile, after wages at workers’ households rose 1.9% to 488,216 yen in August, they fell back 2.0% to 433,502 yen in September.

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

Furniture & Household Goods: 9,690 yen (+8.9%)
Culture & recreation: 31,080 yen (+8.0%)
Education: 14,686 yen (+2.1%)
Transportation & communication: 38,994 yen (+1.7%)
Clothing & footwear: 10,021 yen (+1.2%)

Housing: 16,054 yen (-8.2%)
Other: 62,106 yen (-7.5%)
Fuel, electric and water: 19,897 yen (-6.3%)
Medical care: 11,831 yen (-5.9%)
Food: 67,074 yen (-3.8%)

Last month, “Transportation and Communication” was the only category in which we saw a rise in spending. In September, the categories returned to the evenly spread distribution of five up and five down that was seen in July. Most notable is perhaps the continued decline in spending on energy and food, even as prices continue to show year-on-year rises. Energy prices rose 9.2% in September, while food prices were up 3.0%.

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%
September	+1.51%	+1.23%	+1.54%	+1.89%

All four categories that we’ve been watching are now positive for the first time since January. In what might also prove to be a sign of good news, propensity to consume increased from 78.2 in August to 85.7 in September. This is the highest figure seen since May’s 93.1, and represents the third consecutive monthly increase.

Filed Under Economic Reports, Household Spending