Economic Takeaways From Japan's Retail Sales, Household Spending

What you need to know about Tuesday’s economic data released in Japan:

RETAIL SALES (FEBRUARY)

• Retail sales measured month-on-month slumped 2.3 percent (-0.9 percent forecast) from January, when they dropped 0.4 percent.
• Measured year-on-year, sales rose 0.5 percent (+1.6 percent forecast).

The takeaway: The data shows an economy struggling to rebound after contracting last quarter. Takuya Hoshino of Dai-ichi Life Research Institute in Tokyo said the gain in year-on-year retail sales was exaggerated by the 2016 leap year, which provided more shopping time in February.

HOUSEHOLD SPENDING (FEBRUARY)

• Household spending rose 1.2 percent (-1.9 percent forecast) from a year earlier.
• The rebound from a 3.1 percent drop in January snaps a five-month stretch of declines.

The takeaway: The healthy gain is a modest relief for an economy that has showed signs of continued weakness this year after poor end to 2015. While any pick up in spending is helpful, the data is at odds with the picture presented by retail sales. “Private consumption will probably stay subdued,” said Hoshino, who noted that the disappointing outcome of spring wage talks may crimp spending.

JOBLESS RATE (FEBRUARY)

• Unemployment rate stood at 3.3 percent in February, compared with 3.2 percent in January.
• Job-to-applicant ratio was unchanged at 1.28 in February.

Takeaway: There is tightness in the labor market, which may become a bright spot if it drives significant wage gains. This in turn would help inflation and consumption. The problem is, said Hoshino, the impact so far on household income and spending has been limited.

To contact the reporter on this story: Keiko Ujikane in Tokyo at kujikane@bloomberg.net. To contact the editors responsible for this story: Brett Miller at bmiller30@bloomberg.net, James Mayger

By: Keiko Ujikane

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