— MNI Survey Median Forecast For Dec Tertiary Index: -0.6%
— Japan Tertiary Index Posts 1st M/M Drop In 3 Months; Nov +0.5%
— Japan Dec Tertiary Index +1.8% Y/Y Vs Nov Revised +2.4%
— Japan Tertiary Index Posts 11th Y/Y Rise In Row
— Japan Dec Tertiary Index Drop Led By Wholesale, Retail Trade

TOKYO (MNI) – Japan’s tertiary industry index, which measures
spending in the services sector, fell 0.8% in December from the previous
month, posting the first m/m fall in three months, on slower consumer
electronics sales, the Ministry of Economy, Trade and Industry said on
Tuesday.

The figure came in weaker than the median forecast of a 0.6% fall
in a Market News International survey of economists.

The December drop was led by wholesale and retail trade in
household appliances as well as food and beverages, followed by a
revised 0.5% gain in November (initially +0.6% m/m).

Many shoppers rushed to retail stores before Dec. 1, when the
government halved the reward points it offers for buying TVs, air
conditioners/heaters and refrigerators that require less power to
operate.

This caused a pullback in sales of consumer electronics in
December. Sales of machinery and equipment including consumer
electronics fell 9.4% on year in December, the first drop in 16 months,
after a 48.4% surge in November, the latest retail sales data have
shown.

The seasonally adjusted tertiary index fell to 97.7 in December
from 98.5 in November.

The reading of 94.4 marked in March 2009, when the index slumped
3.4% m/m, remains the lowest level on record. The index hit a record
high of 103.5 in August 2007, when it rose 0.9% from the previous month.

From a year earlier, the unadjusted index rose 1.8% in
December to 104.2, marking the 11th straight year-on-year rise after
gaining a revised 2.4% gain (preliminary +2.5%) in the previous month.

The 0.6% rise in February 2010 was the first y/y increase in 19
months since +0.2% in July 2008.

The index posted a record 7.7% year-on-year drop in March 2009.

In the latest month, the industries that showed slower business
from the previous month include: wholesale and retail trade including
sales of household electronics (-3.2% m/m), scientific, professional and
technical services (-2.0%) and transport and postal activities (-0.9%).

Among the industries that showed increased business from the
previous month were: accommodations, eating and drinking services
(+3.1%), miscellaneous services (+2.3%) and finance and insurance
(+1.0%).

In 2010, the tertiary industry index rose 1.3% from the previous
year, marking the first gain in three years after -5.2% in 2009.

The service sector employs more than half of Japan’s workforce, and
spending on services such as retailing, dining and travel is closely
tied to changes in income and consumer confidence.

The METI changed the base year for the index to 2005 from 2000,
effective with the April 2009 data, resulting in revisions to past
figures dating from January 2003.

The ministry also re-grouped some service industries to reflect
changing business patterns. In particular, it divided up Japan Post’s
huge postal and financial services, which are now being privatized, and
reallocating them into “transport and postal activities” and “finance
and insurance.”

As a result, the category called “compound services” no longer
reflects Japan Post’s diversified postal and financial services but has
shrunk to show the limited commission business at post offices.

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

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