Retail Sales Gain on Clothes, Cars, Supporting View Recovery is Intact
Japan’s retail sales growth improved in June after the biggest slowdown in more than a year, supporting the central bank’s assessment that the economic recovery is intact.
Sales increased 3.2 percent from a year earlier, the sixth straight gain, led by demand for cars, gasoline and clothes, the Trade Ministry said today in Tokyo. The result matched the median estimate of 14 economists surveyed by Bloomberg News.
The report adds to evidence that the economic rebound may last even as export growth slows. Sentiment among Japanese has increased every month this year as wages and job prospects improve, signaling household spending may withstand the expiry of government stimulus measures later this year.
“Consumer spending will likely increase gradually, albeit at low levels,” said Mika Ikeda, an economist at Nomura Securities Co. in Tokyo. The effects of government incentives to purchase durable goods “are wearing off,” she said.
The Nikkei 225 Stock Average fell 0.5 percent at the 11 a.m. lunch break in Tokyo after the Federal Reserve said U.S. growth was slowing in some areas, clouding the outlook for Japanese exporters.
Last month’s retail improvement came after annual sales growth slowed 2 percentage points in May, the worst deterioration since February 2009. Hotter-than-usual weather spurred demand for drinks, ice cream and summer clothes, with temperatures in Japan’s eight major cities 1.4 degrees Celsius higher than the June average, the ministry said.
Clothing and fabric sales climbed 5.3 percent from a year earlier. Car sales advanced 12.4 percent on government incentives that are scheduled to expire in September. Fuel receipts increased 8.4 percent.
Retail sales rose a seasonally adjusted 0.4 percent in June from May, when they declined 2 percent, the biggest drop in more than five years, today’s report showed.
Bank of Japan board member Hidetoshi Kamezaki yesterday repeated the central bank’s view that the economy is likely to continue to recover gradually.
Matsuya Co., the department-store chain, is among retailers benefiting from an improving outlook for households. The company tripled its first-half net income outlook this month, citing higher-than-expected sales.
Japanese consumer confidence climbed to the highest level since 2007 in June, driven by optimism about jobs and paychecks even as stocks tumbled on concern the global recovery will cool. The ratio of job openings to applicants in May was the highest in more than a year, and wages grew for a third month.
“We’re already beginning to see some marginal boosts” from improvements in wages and the job market, said Masamichi Adachi, a senior economist at JPMorgan Chase & Co. in Tokyo.
Still, Adachi added that the spending rebound may stall at the beginning of next year after government incentives to buy electronic appliances expire in December. That will come just as the export slowdown becomes more pronounced as the global recovery moderates, he said.
Nomura Holdings Inc., Japan’s biggest brokerage, this week cut its forecast for growth in Japan, citing a stronger yen and waning exports. The economy will expand 1.5 percent next fiscal year, less than the 2.1 percent Nomura predicted earlier.