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Japan household spending down 0.5% in July; durables up, services down

According to the Ministry of Internal Affairs and Communications, Japan’s average household spending fell by 0.5% in July. Once again, the drop was smaller than had been generally forecasted. However, it does represent the fifth consecutive month in which household spending has fallen year-on-year.

Average spending at households with two or more persons came to 298,366 yen, down 0.5% from a year ago, while spending at households with a worker as head of household fell 0.1% to 330,483 yen. At the same time, wages at workers’ households fell 3.5% to 587,732 yen in July.

In terms of spending at households with two or more persons, here’s a breakdown by category: Read more

Japan’s core consumer price index up 2.4% in July

With a 2.4% rise in July, Japan’s core consumer prices have now risen every month so far this year, and for ten consecutive months overall, according to data released today by the Ministry of Internal Affairs and Communications.

Because Japan includes energy prices as part of its core CPI, it’s also helpful to look at what the CPI looks like with energy stripped out. Here’s a breakdown of CPI categories for July:

• July general nationwide consumer price index: +2.3%
• July general nationwide consumer price index (excluding rent): +2.8%
• July nationwide core CPI (excluding fresh food): +2.4%
• July nationwide consumer price index (excluding fresh food and energy): +0.2%

Inflation in all four categories has accelerated beyond what was seen last month, and for the first time this decade we have seen the CPI rise for two months in a row when energy prices are stripped out. Of course, this is still only the third time in the past ten years we have seen a rise in this figure.

Here’s a breakdown of price increase by major category: Read more

Japan corporate service price index up 7.1% in July; Dentsu feeling the pinch

Last month, the news was that in June, Japan’s corporate price index had increased 5.6%, which was the highest rise seen since 1981. According to figures released by the Bank of Japan yesterday, July has far outstripped that figure, with wholesale prices showing a 7.1% increase, the highest seen in 27 years (which is still 1981).

According to the data, producer prices for petroleum and coal products increased 43.6% year-on-year, while while prices for iron and steel products jumped 26.7% and those for industrial chemicals were up 7.3%.

It’s also costing much more to ship goods around the country and overseas: Ocean freight prices were up 27.5% and international air freight cost 16.3% more than a year ago, while domestic air freight prices were up 6.5%. Read more

Japan supermarket sales up 0.9% in July, first rise since February

Japan’s supermarket sales rose for the first time in four months in July, post a 0.9% gain to 1.12 trillion yen, according to the Japan Chain Stores Association. These figures follow a 0.9% fall in May, and represents only the second time supermarket sales have increased in the past 31 months. However, when new shops (those opened within the past year) are included in the data, supermarkets saw a 4.4% decline in sales.

Here is a breakdown of June’s adjusted figures (not including newly opened stores): Read more

Japan’s exports up 8.1% in July; China imports more from Japan than the US for the first time since WW2

According to data released today by the Ministry of Finance, Japan’s trade surplus shrank by 87% in July, to 91.1 billion yen, as slower exports of cars, auto parts and electronics led to a 19.0% fall in Japan’s trade surplus with the United States. The overall trade surplus has now fallen for five straight months, while the surplus with the United States fell for the eleventh consecutive month.

During July, the value of imports jumped 18.2% to 7.54 trillion yen, while exports rose 8.1% to 7.63 trillion yen. Aside from the US market, exports to Asia increased 12.7%, exports to the EU area increased 4.1%, exports to Russia were up 45.8%, those to the Middle East were up 27.5% and exports to Australia increased 32.8%. Read more

Japan’s GDP drops an annualized 2.4% in the second quarter

Just three months ago, the Cabinet Office announced that Japan’s first quarter GDP has jumped a surprising 3.3% in annualized terms. No one expected a repeat of such rosy figures in the second quarter, and the 2.4% annualized contraction reported yesterday by the Cabinet Office was about what most observers had expected.

The bad news resounds: Exports fell by 2.3% in the second quarter, declining for the first time in three years. Imports fell 2.8 percent. Consumer spending was down 0.5%, while capital spending slipped 0.2 percent.

Looking through today’s headlines, it’s difficult to find good news: Cell phone sales have dropped through the floor - though this is a cause of an ill-explained change in the way mobile phones are sold in Japan, and should lead to sales increases next year. In the second quarter, sales at DoCoMo fell 21%, AU saw a 19% fall and Softbank’s sales slid 23%. As the Nikkei puts it: Read more

Japan consumer confidence hits all time lows - again - in July

In June we saw Japan’s consumer confidence fall to an all-time low. July’s figures, released yesterday by the Cabinet Office, show that a new all-time low has been reached. The general consumer confidence index figure fell from 32.6 in June to 31.4 in July, for a drop of 1.2 points. Talk of an economic stimulus package from the government has certainly not raised hopes amongst consumers, who continue to deal with higher energy and food prices.

The Consumer Confidence Index itself contains five scores, each of which is considered positive when above 50, and pessimistic when below the 50 mark. Here’s a breakdown for July’s figures, with the change from last month: Read more

Japan household spending down 1.8% in June; Spending on durables in negative territory

According to the Ministry of Internal Affairs and Communications, Japan’s household spending fell by 1.8% in June. Although the drop was smaller than had been generally forecasted, it does represent the fourth consecutive month in which household spending has fallen year-on-year.

In May we saw a fall of 3.2% after a drop of 2.2% in April and 1.6% in March. The Ministry also tells us that average household income declined 2.1% against June of 2007, falling to 737,166 yen. June income seems high when compared to other months due to the summer bonus being received in June. This year saw the average bonus falling for the first time in six years, though the decline was only 0.08%. A separate report from the Ministry of Health, Labor and Welfare showed overall wages falling 0.6% in June.

Here’s a breakdown of spending per category, along with changes against June of last year: Read more

Japan’s consumer price index up 1.9% in June, for 9th straight monthly increase

With a 1.9% jump in June, Japan’s core consumer prices have now risen every month so far this year, and for nine consecutive months overall, according to data released by the Ministry of Internal Affairs and Communications last week. Until September 2007, we had seen the exact opposite; Japan’s core consumer prices had fallen for nine consecutive months until that point.Last summer, Bank of Japan officials shrugged off the continually falling CPI by saying that lower energy prices had not yet been worked out of the CPI

Of course, Japan includes energy prices as part of its core CPI, and we have now seen for two straight years that it is necessary to keep track of not only “core” consumer prices, but also what the CPI looks like when energy is also stripped out. Here’s a breakdown of CPI categories for June:

• June general nationwide consumer price index: +2.0%
• June general nationwide consumer price index (excluding rent): +2.3%
• June nationwide core CPI (excluding fresh food): +1.9%
• June nationwide consumer price index (excluding fresh food and energy): +0.1%

Thus, with fresh food and energy prices stripped out (Japan also strips out the prices of alcoholic beverages, which have been on the rise), we see a 0.1% increase for the second time this year. This is only the second increase seen in this category over the past decade.

Here’s a breakdown of price increase by major category:

• Fuel, light and water charges +6.8%
• Transportation and communication +4.3%
• Food +3.6%
• Education +0.7%
• Miscellaneous +0.6%
• Clothes and footwear +0.5%
• Housing +0.2%
• Furniture and household utensils -0.4%
• Medical Care -0.5%
• Reading and recreation -0.6%

These figures are little changed from May. The same categories that rose in May rose again in June. Those that fell in May also fell in June. The largest differences can be found in the top three rising categories, which all saw increases at least 1% higher than a month ago.

Looking at individual categories, about 60% of products surveyed saw a rise in prices. Transportation expenses are pushing up the prices of fresh food as well; carrots, negi and spinach all cost over 10% more than a year ago.

The big question now is whether or not core CPI will see a jump above 2.0% in July, as 2.0% is what the Bank of Japan’s policy board considers to be the upper limit of price stability. We are looking for a boost above the 2.0% level. Few expect to see a rate hike in August or September, but could the BOJ’s hand be forced by its own policy?

Japan convenience store sales up 4.2% in June, higher sales projected for July

While sales at both department stores and supermarkets continued to flounder in June, sales at convenience stores rose 4.2% year-on-year in June after having posted a 3.7% increase in May. According to data released by the Japan Franchise Association, sales at the nation’s convenience stores came to 648.7 billion yen in June, which was just lower than the 648.8 billion yen seen in May.

The future looks even brighter for convenience store sales. Reuters is reporting that the Taspo ID system, which must now be used nationwide to purchase tobacco products at vending machines, is providing a boost to tobacco sales at convenience stores. July’s sales increases are projected to surge into the double digit range.

Share prices at major supermarket chains Family Mart and Lawson are up 22% over the past quarter, as the market anticipates what could be the highest sales growth posted in the past decade at many convenience store operators.

One interesting part of the Reuters article: While department stores and supermarkets continue to blame bad weather for their decline in sales, “price hikes at supermarkets and favourable weather have helped sales [at convenience stores].”

Of course, growth from tobacco sales will be filtered out of the system in a year’s time, and Japan’s convenience store chains are still going to have to find ways to continue increasing revenue, which means we still expect to see Japanese convenience store firms make further attempts to establish overseas operations.

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