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Economy in Brief

Household Expenditures in Japan Show First Yr/Yr Rise in 13 Months; Unemployment Holds at 4.0% for a Third Month
by Carol Stone March 2, 2007

Consumer spending appears to be recovering in Japan. After a three-month-long decline last summer and early autumn, the index of household living expenditures gained 1.4% in January to 99.3 (seasonally adjusted, 2005=100), the highest value since October 2005, according to a report today by the Statistics Bureau of the Ministry of Internal Affairs and Communications. In real terms, the index was also up 1.4% in January.

The average spending amounts per household are published in yen on a nominal, not seasonally adjusted basis. The January figures show a 0.63% rise from a year ago, the first year-on-year increase since December 2005. By types of goods and services, the biggest advances were in clothing (8.3%), transportation & communication (6.6%) and recreation & culture (4.4%). The Statistics Bureau also reports a division by motivation: fundamental or selective. Spending on "fundamental" items was up 0.26%, while "selective" outlays gained 1.17%; each of these has shown a positive year-ago comparison in recent months, but this is the first time both have moved ahead in the same month.

Labor market data were also reported today for January, and they might be seen as helping to give consumer spending a firmer base. The number employed did decline in each December and January, by 210,000 and 220,000, respectively. But that followed four consecutive increases totaling almost the same: 440,000. So the January level of employment, 63.730 million, was about the same as the 63.720 million in July. The accompanying unemployment data show January as the third month running at 4.0%, an almost nine-year low. With the skittish conditions for employment, the low unemployment rate is obviously due in part to a downtrend in labor force participation, not a totally healthy development. Still, progress of sorts is being made in the Japanese economy. The base that is forming in the labor market and the consumer sector may well be better for longer-term expansion than spikes that might be followed by frightening plunges.

JAPAN: Household Living Expenditures Jan 2007 Dec 2006 Nov 2006 Year Ago 2006 2005 2004
Index, Nominal, SA, 2005=100 99.3 97.9 98.4 98.6 98.1 100.0 100.8
  Real, SA, 2005=100 99.1 97.7 98.3 98.5 97.8 100.0 100.5
Amounts, NSA, Y/Y %Chg
Total 0.63 -1.46 -0.26 -1.86 -0.81 0.38
Fundamental Items 0.26 1.63 -2.40 -0.96 0.09 -1.23
Selective Items 1.17 -6.09 2.80 -3.05 -1.97 2.55
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