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Japan’s Retail Sales Rise Less Than Expected in September

Japan’s Retail Sales Rise Less Than Expected in September
Visitors rest in seats at a cafe inside the National Art Center in Tokyo, Japan. The report adds to signs that the world’s third-largest economy is at risk of contraction in the second half of the year, as slowing global demand and a territorial dispute with China weaken exports. Photographer: Noriko Hayashi/Bloomberg

Japan’s retail sales rose less than forecast in September as the expiry of government subsidies for car purchases sapped consumer demand.

Retail sales rose 0.4 percent from a year earlier, the Trade Ministry said in Tokyo today, after a revised 1.7 percent rise in August. The median estimate of 15 economists surveyed by Bloomberg News was for a 1 percent increase. Sales dropped 3.6 percent from August, the largest monthly fall since March 2011.

The report adds to signs that the world’s third-largest economy is at risk of contraction in the second half of the year, as slowing global demand and a dispute with China hurt exports and manufacturers like Honda Motor Co. and Canon Inc. expect weaker earnings. The government last week announced 750 billion yen ($9.4 billion) of stimulus to shore up growth.

“There are no positive signs in Japan’s economy,” as domestic demand slumps and external demand remains weak, said Azusa Kato, an economist at BNP Paribas SA in Tokyo. “The economy will probably contract for two consecutive quarters through the end of the year.”

The Nikkei 225 Stock Average was 0.2 percent lower at 12:39 p.m. in Tokyo. The yen was trading at 79.72 against the dollar after rising 0.8 percent to 79.65 on Oct. 26, the largest advance since Aug. 22.

Auto Sales

Domestic sales of motor vehicles in September fell 13.9 percent from the previous month, the data showed, the biggest drop since March last year as government subsidies for purchases of fuel-efficient cars ended. The government stopped accepting applications for the subsidies on Sept. 21.

Honda cut its full year profit forecast by 20 percent to 375 billion yen, as Chinese consumers shunned Japanese brands amid a territorial dispute. In September, sales in China by Honda fell 40 percent and Toyota Motor Corp.’s plunged 49 percent.

Canon, the world’s largest camera maker, last week cut its full-year profit forecast on sluggish global demand, disrupted production in China and a stronger yen.

Japan’s Economy Minister Seiji Maehara said Oct. 26 that the government’s stimulus package announced last week would boost gross domestic product by 0.1 percentage point, without specifying over what period. The government hasn’t decided how to fund planned further stimulus steps to be drawn up next month, Maehara said, adding that it’s too early to say how big those extra measures will be.

BOJ Pressure

Maehara said last week that he wants to attend tomorrow’s Bank of Japan policy meeting, at which the bank will decide whether to add monetary stimulus. All but one of 27 economists surveyed by Bloomberg News expect the central bank to add to easing at the meeting.

Japan’s government this month cut its economic assessment for a third straight month, the longest streak since the 2009 global recession, as exports fell for a fourth month in September and machinery orders fell more than expected in August. Morgan Stanley and Citigroup Inc. are among those who expect the economy to contract in the third and fourth quarters of this year.

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