Japan’s Retail Sales Rose Less-Than-Forecast 0.1% in December

Japan’s retail sales rose less than economists forecast in December, indicating that consumer demand remains weak in the world’s third-largest economy.

Sales rose 0.1 percent from November, when they fell 0.1 percent, the Trade Ministry said in Tokyo today. The median estimate of eight economists surveyed by Bloomberg News was for a 0.4 percent gain. Sales rose 0.4 percent from a year earlier.

Weak consumer demand and a seventh monthly fall in exports in December highlight the challenges facing Prime Minister Shinzo Abe as he tries to defeat deflation and lead the country out of recession. The smaller-than-forecast increase in retail sales was even as colder-than-usual weather aided fuel sales.

“There are few positive signs for private consumption,” Yoshimasa Maruyama, chief economist at Itochu Corp. (8001) in Tokyo, said before the report. “Employment and income conditions aren’t improving much as wages aren’t rising.”

The nation’s gross domestic product shrank at an annualized 3.5 percent pace in the third quarter of last year, the second straight contraction and meeting the textbook definition of a recession. The median estimate of economists surveyed by Bloomberg News is for a 0.6 percent decline in the three months through December 2012, with a return to growth this quarter of 1.6 percent.

“Japan’s economy will probably head back to a gradual recovery from this quarter as external demand rebounds, while the government’s stimulus may lend support from the second quarter,” Azusa Kato, an economist at BNP Paribas SA in Tokyo, said before the report.

The government unveiled 10.3 trillion yen ($113 billion) in fiscal stimulus earlier this month.

Wages dropped for a third straight month in November from the previous year. Large companies cut winter bonuses by 2.95 percent in 2012 from the previous year to 778,996 yen, according to a report released by the Keidanren, a business lobby group, in December.

To contact the reporter on this story: Keiko Ujikane in Tokyo at kujikane@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net

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