Japanese household spending plunges as consumers wary of virus
- Household spending in September is down 1.9% per year vs f’cast -3.9%
- Consumers remain suspicious even as COVID cases have declined
TOKYO, Nov. 5 (Reuters) – Japanese household spending fell in September as consumers remained cautious about COVID-19, bolstering opinion that the world’s third largest economy contracted in the third quarter .
The data highlighted the need for policymakers to support domestic consumption as the global supply crisis hits the export-dependent economy.
Spending fell 1.9% year-on-year in September, following a 3.0% drop in August, government data showed on Friday. It was a better reading than a median market forecast for a 3.9% slide in a Reuters poll.
In seasonally adjusted monthly terms, spending jumped 5.0% in September, marking the first increase in five months, beating growth expectations by 2.8%.
Many economists expect Japanese production to contract in the third quarter, in part due to disappointing industrial production figures, which have steadily declined due to cuts in auto production. Read more
Beyond automakers, supply shortages of semiconductors and other components produced in coronavirus-hit Southeast Asia have caused a ripple effect in other parts of the Japanese economy. Export growth slowed while private consumption stagnated due to falling car sales. Read more
The government is due to release a preliminary estimate of gross domestic product for July-September on November 15.
To support Japan’s relatively lukewarm economic recovery, Prime Minister Fumio Kishida pledged earlier this week to work out a “large-scale” stimulus package in mid-November. Read more
Reporting by Kantaro Komiya; Editing by Sam Holmes and Richard Pullin
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