23.2 C
New York

Japan’s household spending slumps by record as curbs hit travel, dining out By Reuters

Must read

Can You Detox Your Lungs? If so, what suggestions do you have for improving lung health?

&#032 submitted by &#032 /u/answertoyoursearch &#032

Bonobos Off Duty Pants Critique and Endorsement

Shop $98, bonobos.comWelcome to The Esquire Endorsement. Seriously researched. Carefully vetted. These picks are the best way to invest your hard-acquired income.Lifeless smack in...

W Brom 3 – 3 Chelsea

Chelsea fought back from...

2020 presidential election: Trump and Biden engaged in a peace election

For the first time in years, the foreign policy fight in the 2020 US presidential election isn’t about which candidate would best...

© Reuters. FILE PHOTO: A waitress wearing a protective mask cleans a table at Toshirhin restaurant in Tokyo

By Daniel Leussink and Yoshifumi Takemoto

TOKYO (Reuters) – Japan’s household spending fell at the fastest pace on record in May, as consumers heeded authorities’ calls to stay home to contain the coronavirus pandemic, pushing the world’s third-largest economy deeper into decline.

Wages and a gauge of economic activity also tanked in the month, keeping pressure on policymakers to revive business and consumer confidence.

Household spending slumped 16.2% in May from a year earlier, official data showed on Tuesday, falling at the quickest pace since comparable data became available in 2001.

The drop, which was larger than a median market forecast for a 12.2% fall, extended an 11.1% decline in April.

Separate data on Tuesday showed May inflation-adjusted real wages dropped at the fastest pace since June 2015, adding to signs of stress in the labour market.

Analysts expect any recovery in spending to be slow and fragile as households remain reluctant to loosen the purse strings even after a state of emergency was lifted in May.

“The pace of recovery is worrying,” said Atsushi Takeda, chief economist at Itochu Economic Research Institute.

“Even though the government has rolled out policy measures, it’s difficult for their impact to come out quickly.”

MIXED PICTURE

Still, the Bank of Japan is expected to maintain its view in its quarterly report next week that the economy will gradually recover later this year.

Tuesday’s data showed large cuts in spending on hotels, transportation and eating out. On the other hand, stay-home policies boosted spending on pork and beef, alcohol and sanitary goods like face masks and paper towels.

Last year’s unprecedented 10-day Golden Week holiday to celebrate the enthronement of then-Crown Prince Naruhito made the drop in spending more pronounced, partly due to larger than usual spending on tourism in 2019, a government official said.

Policymakers hope a pickup in domestic demand will be strong enough to bring about an economic recovery, as long as Japan can avert a big second wave of coronavirus infections.

But the outlook for household spending is dim.

Japan’s coincident indicator index, a gauge of the economy that includes factory output and employment, fell in May to the lowest level since 2009.

A separate BOJ survey showed Japanese households were the most pessimistic about the economy in more than a decade in the June quarter, underscoring the devastating impact the pandemic has had on consumption.

While the government compiled massive spending packages to cushion the blow from the pandemic, spending could take a larger hit if the worsening business outlook forces firms to slash workers’ bonuses or lay off more workers.

“That, in turn, could cause income levels to drop further,” said Takeshi Minami, chief economist at Norinchukin Research Institute.

“I think a phase of worsening consumption will strengthen in the second half of the year.”

Source link

Some Exciting Offer For You

More articles

LEAVE A REPLY

Please enter your comment!
Please enter your name here

87 − = 85

Latest article

Can You Detox Your Lungs? If so, what suggestions do you have for improving lung health?

&#032 submitted by &#032 /u/answertoyoursearch &#032

Bonobos Off Duty Pants Critique and Endorsement

Shop $98, bonobos.comWelcome to The Esquire Endorsement. Seriously researched. Carefully vetted. These picks are the best way to invest your hard-acquired income.Lifeless smack in...

W Brom 3 – 3 Chelsea

Chelsea fought back from...

2020 presidential election: Trump and Biden engaged in a peace election

For the first time in years, the foreign policy fight in the 2020 US presidential election isn’t about which candidate would best...

John Buell: Novels about Canada’s Vulnerable Foreshadowed Current Furors

Karen Black in The Pyx, based on the novel of the same name by John Buell (Host Productions Quebec/IMBd) Montreal writer John Buell’s haunting novels foreshadowed...