— April’s -0.7% 1st Y/Y Drop In 2 Months, 3rd In Past 12 Months

TOKYO (MNI) – Japan’s average household spending fell 0.7% from a
year earlier to Y299,996 in April, as purchases of clothing, food and
cars decreased, data from the Ministry of Internal Affairs and
Communications showed Friday.

It was the first year-on-year drop in two month in inflation
adjusted terms and the April figure came in much weaker than the
consensus call of +2.2%. It was the third y/y drop in the past 12
months.

The drop in April followed a rise of 4.4% in March, which was the
largest y/y gain since +5.0% in May 2004, and a 0.5% fall in February,
and gains of 1.7% in January, 2.1% in December and 2.2% in November. The
May 2009 rise (+0.3%) was the first y/y gain in real terms in 16 months.

Real spending fell in six out of the 10 categories in April:
clothing and footwear (-13.1% y/y), culture and recreation (-3.3%),
transportation and communication including cars (-1.7%), food (-1.1%),
education (-0.8%) and other consumption expenditures (-0.1%).

These losses offset higher spending on home maintenance and rent
(+12.7%), medical care (+10.7%), furniture and household utensils
(+3.2%) and utility charges (+3.1%).

Tax breaks for buying low-emission vehicles have supported demand
for automobiles, but car purchases in April posted the first
year-on-year drop in two months after a surge in the previous month.

In March the transportation and communication category, including
automobiles, was up 13.2% on the year.

The government’s reward program for buying greener consumer
electronics has continued to prop up demand for certain models of TVs,
refrigerators and air conditioners/heaters.

Demand for home durable goods, such as washing machines and
refrigerators, was reflected in spending on “furniture and household
utensils,” which showed the seventh consecutive y/y rise.

The average real income of salaried workers’ households rose 1.6%
y/y in April to Y474,616, posting the third straight y/y rise, following
gains of 0.4% in March and 1.3% in February and drops of 0.5% in January
and 4.8% in December. It rose a nominal 0.2% in April.

Real disposable income in the average salaried workers’ household
rose 0.8% in April to Y383,980, also up for the third month in a row
after a 0.3% rise in March. It fell 0.6% in nominal terms in April.

tokyo@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4833 **

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