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Japan's August household spending rises for 9th month, but wages fall

Japan's August household spending rises for 9th month, but wages fall
FILE PHOTO: Shoppers look around goods at a shop in Tokyo, Japan October 1, 2019. REUTERS/Kim Kyung-Hoon/File Photo -
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Kim Kyung Hoon(Reuters)
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By Leika Kihara and Kaori Kaneko

TOKYO (Reuters) – Japan’s household spending rose for a ninth straight month in August, data showed on Tuesday, offering some relief for the export-dependent economy as it confronts softer global demand and a protracted U.S.-China trade war.

But separate data showed wages fell for an eighth consecutive month in August, adding to consumer pain as the government kicked off a sales tax hike this month.

The mixed batch of data will keep policymakers under pressure to deploy more fiscal and monetary stimulus measures to shield the economy from a recession, analysts say.

Household spending in August rose 1.0% from a year earlier, accelerating form a 0.8% increase in July but falling slightly short of a median market forecast for a 1.2% increase, government data showed.

From the previous month, household spending gained 2.4% in August against a median market forecast for 2.8% growth.

“Our assessment remains unchanged, which is that household spending is picking up,” a government official told a media briefing on the data.

The slowdown in China and the trade war between the world’s two largest economies have hurt business sentiment in Japan, which is also grappling with softer global demand for its exports. The impact from a higher sales tax could further weigh on the economy.

Japan rolled out a twice-delayed increase in the sales tax to 10% from 8% on Oct. 1, a move considered critical for fixing the country’s tattered finances.

While the government has taken steps to ease the burden on consumers by offering vouchers and tax breaks, there are fears the higher tax could dent spending and tip the economy into recession.

Weak wage recovery is also a concern for private spending.

Separate data showed real wages adjusted for inflation fell for an eighth straight month in August, which could hurt consumption following the sales tax hike.

Prime Minister Shinzo Abe pledged on Friday to deliver “all possible steps” if risks to the economy intensified, signalling his readiness to boost fiscal spending if this month’s sales tax hike triggers a sharp downturn in growth.

Expectations have also grown that the Bank of Japan will implement additional stimulus after its governor Haruhiko Kuroda signalled the central bank won’t rule out loosening monetary policy as early as its Oct. 30-31 meeting.

(Editing by Jacqueline Wong)

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