TOKYO ⸺ Japan’s household spending soared in April, official figures showed on Friday, although the gains were mostly driven by base effects from last year’s sharp fall due to the initial impact of the coronavirus pandemic.
An extension of state of emergency restrictions in Tokyo and other major areas is hurting the outlook for Japan’s economy, which already fell back into contraction in the first quarter due to weak consumer and business spending.
Household spending rose 13.0% year-on-year in April, after a 6.2% rise in March, government data showed, and was stronger than a median market forecast for a 9.3% gain in a Reuters poll.
The jump was largely a rebound from a sharp contraction in April last year, when household spending slumped 11.1% year-on-year.
It marked the steepest year-on-year rise since comparable monthly data became available in January 2001, a government official said.
The month-on-month figures posted a small, 0.1% rise compared with a forecast of a 2.2% decline.
While the rise was larger-than-expected, it was unlikely to dispel worries that Japan will lag recoveries seen in other major economies, with data on Thursday showing activity in the services sector shrank at a faster pace in May due to the impact from the emergency curbs.
Some analysts are worried the world’s third-largest economy may slide back into recession in the current quarter, defined as two straight quarters of contraction, as weakness in consumer sentiment persists longer than originally thought.
Reporting by Daniel Leussink; Editing by Sam Holmes; Reuters