TEHRAN (Iran News) – Japan’s household spending fell at the fastest pace on record in May as consumers heeded authorities’ calls to stay home to contain the coronavirus pandemic, pushing the world’s third-largest economy deeper into decline.
Large Japan’s household spending drop will add to growing pressure on policymakers to ramp up moves to restore confidence among businesses and in particular consumers, financialpost.com reported.
Household spending slumped 16.2 percent in May from a year earlier, government data showed on Tuesday, falling at the quickest pace since comparable data became available in 2001.
The drop, which was larger than a median market forecast a 12.2 percent fall, followed an 11.1 percent decline in April.
A spending recovery is expected to be fragile and takes time as households remain reluctant to loosen the purse strings even after a nationwide state of emergency was lifted in May.
Still, the Bank of Japan is expected to roughly maintain its view the economy will gradually recover later this year, sources familiar with its thinking said.
Tuesday’s data showed large cuts in spending on hotels, transportation, and eating out as people stayed at home.
On the other hand, stay-home policies boosted spending on beef and sanitary goods like face masks.
Overall, the outlook for household spending is dim for the months ahead because of an anticipated rise in job losses, which is weighing on sentiment.
Separate data on Tuesday showed May inflation-adjusted real wages dropped at the fastest pace since June 2015, in a sign of stress in the labor market.
- source : Iran Daily, Irannews