Japan’s retail sales fell at a slower pace than economists estimated in May, adding to signs that the worst of the post-disaster downturn in the world’s third-largest economy may be over.
Sales slid 1.3 percent from a year earlier, the Trade Ministry said in Tokyo today, the smallest drop since the March 11 earthquake. The median estimate of 18 analysts surveyed by Bloomberg News was for a 2.2 percent decline.
Today’s report adds to signs that the economy is recovering from the shock of an earthquake that left more than 23,000 people dead or missing. Beef-bowl chain operator Yoshinoya Holdings Co. is among retailers reporting a rebound in sales as consumer sentiment springs back from a two-year low.
“It’ll be a gradual recovery from here,” Azusa Kato, an economist at BNP Paribas in Tokyo, said before the report. “But we have to remember this is only a rebound from an extraordinary drop. We could still see secondary effects from the disaster since jobs and incomes haven’t been faring well.”
Consumers stayed home after the disaster and store closures due to power shortages also hurt businesses, causing retail sales to tumble the most in 13 years in March. Economic and Fiscal Policy Minister Kaoru Yosano was among lawmakers urging Japanese to spend, warning that consumer restraint was going to exacerbate the downturn after the earthquake.
Yoshinoya said same-store sales increased 1.4 percent in May from a year earlier after slumping 10.2 percent in the previous month. Consumer confidence rebounded in May.
Some retailers are also expanding market share in Japan’s shrinking market. L’Occitane International SA, a maker of skin-care products and soap, said yesterday its full-year profit grew 22 percent thanks to higher demand in Japan, its biggest customer. The country accounted for 25 percent of revenue in the period.
The earthquake will probably continue to hold down hiring and pay, slowing gains in consumer spending, BNP’s Kato said. The earthquake snapped 12 consecutive months of wage gains in March and pay continued to decline in April. Japan’s unemployment rate probably rose to 4.8 percent in May, according to the median of 31 estimates in a Bloomberg survey. The report is due this week.