Japan’s retail sales rose more than economists forecast in February, indicating that consumer confidence is returning as reconstruction demand boosts the world’s third-biggest economy.
Sales increased 3.5 percent from a year earlier, the biggest advance since Aug. 2010, the Trade Ministry said in Tokyo today. The median estimate of 15 economists surveyed by Bloomberg News was for a 1.4 percent increase. From a month earlier, sales gained 2 percent.
The Nikkei 225 Stock Average climbing to pre-earthquake levels and a government subsidy for buyers of fuel-efficient cars are aiding domestic demand, while declines in the yen have helped exporters. Gross domestic product may expand an annualized 1.7 percent this quarter after a 0.7 percent contraction in the final three months of last year, according to the median estimate in a Bloomberg News survey of analysts.
“Today’s report adds to evidence that Japan’s economy will return to growth this quarter,” said Azusa Kato, an economist at BNP Paribas in Tokyo. “Consumer spending will likely hold steady, supported by reconstruction demand and the government’s subsidy program.”
Today’s gains in year-on-year retail sales were magnified by the leap year that provided more shopping days in February compared with last year, Kato said. Still, the overall trend of retail sales is strong, she said.
Sales of automobiles advanced 21.4 percent, the biggest contributor to the gain in overall sales, today’s report showed. Toyota Motor Corp., the world’s largest seller of gasoline-electric autos, forecasts sales in its home market will grow 30 percent from a year earlier to 2.32 million units on higher demand for a new small Prius model and its other hybrids after the Japanese government introduced the incentives.
The Japanese government began waiving some taxes and offering rebates for certified low-emission vehicles in December, allocating 300 billion yen ($3.8 billion) in the fiscal budget. Eligible consumers will be exempt from paying the 3 percent purchase tax, the 2,500 yen per half-ton duty and receive a rebate, according to the nation’s transport ministry.
“The eco-car subsidy has made a big difference to spending on autos,” David Rea, an economist at London-based Capital Economics Ltd., said before the report. “As the outlook starts to brighten, we’ll see consumer spending rising further.”
A consumer confidence index is back at pre-quake levels and next week’s Tankan index of corporate sentiment may show that large manufacturers are less pessimistic, a Bloomberg News survey indicates.
Shares in Fast Retailing Co., which opened the world’s largest Uniqlo clothing store this month, said March 2 that same-store sales at its Uniqlo Japan outlets rose 2.3 percent in the September-February period on strong sales of winter clothing. Seven & I Holdings Co. Ltd., a convenience store chain, will make a record full-year operating profit of about 290 billion yen, the Nikkei newspaper reported March 16, without stating where it obtained its information.