Japan retail sales continues positive result
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Retail sales in Japan have reportedly risen for the ninth straight month year on year, reflecting the importance of private consumption to the world’s third largest economy.
However while the news has prompted enthusiasm in the Japanese central bank, claiming it reflects improved consumer confidence, other commentators suggest the pace of gains is slowing.
A senior economist at BNP Paribas Securities Azusa Kato said employment and household incomes are not so robust as the Bank of Japan thinks.
“As such, private consumption is likely to pull back from a rebound seen in the April-June quarter.”
Senior Japan economist at Capital Economics Marcel Thieliant said the upshot is that private consumption started Q3 on a soft note.
“However, the fundamentals for a continued improvement in spending remain in place. Both employment and wages are growing strongly, so household incomes are expanding rapidly.”
Wages are on the increase in Japan with the gradual aging of the working population.
Questions & Answers
Q.What is the current trend in retail sales in Japan?
What is the current trend in retail sales in Japan?
Retail sales in Japan have reportedly increased for the ninth consecutive month when compared to the previous year. This positive result highlights the significant role private consumption plays in the country's economy.
Q.Why do some economists believe the positive trend in retail sales might not continue strongly?
Why do some economists believe the positive trend in retail sales might not continue strongly?
Some economists, such as Azusa Kato from BNP Paribas Securities, suggest that employment and household incomes are not as strong as the central bank believes. This could lead to private consumption pulling back after its recent rebound.
Q.What factors support a continued improvement in spending despite some concerns?
What factors support a continued improvement in spending despite some concerns?
Marcel Thieliant from Capital Economics points out that the fundamentals for continued spending improvement are still present. Both employment and wages are growing strongly, leading to rapidly expanding household incomes.
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