Japan's retail sales fell in October as consumers spent less on cars and clothing, suggesting growth in the world's second-largest economy is slowing.
Sales fell 0.3 percent, seasonally adjusted from September, after a 0.8 percent drop that month, the Ministry of Economy, Trade and Industry said in a report in Tokyo yesterday.
Business for car showrooms is slacking after the release of new models earlier in the year, while warmer-than-average weather has cut demand for clothes at retailers such as Aeon Co. Spending by individuals may rise as consumers spend winter bonuses and wages rise, limiting the extent of the economy's slowdown this quarter, said economist Azusa Kato.
"The decline reflects slower sales of cars and the warmer weather," said Kato, an economist at BNP Paribas Securities Japan Ltd. "The overall environment for consumer spending is healthy, with wages rising, employment continuing to improve and bonuses expected to rise."
Winter bonuses at Japan's large companies will rise 5.35 percent to 819,638 yen (US$6,847), the third consecutive increase and an all-time high, the Nihon Keizai newspaper reported last Friday, citing its own survey of 264 companies nationwide. It's also the first time in 15 years that the rate of increase will exceed 5 percent.
"Improving winter bonuses will probably give support to consumption," said Soichi Okuda, a senior economist at Sumitomo Research Institute in Tokyo.
Japan's government bonds fell on speculation 10-year yields are too low given the outlook for stronger economic growth.
Japan's consumer spending slowed in the third quarter to grow 0.3 percent, seasonally adjusted, after rising 0.7 percent in the second quarter and 1.7 percent in the first.
From a year earlier, sales at supermarkets, department stores, restaurants and other retailers fell 0.3 percent, the first decrease in 8 months. That compares with a rise of 0.5 percent according to the median of 12 economists in a Bloomberg News survey.
Sales of automobiles in October fell 2.7 percent from a month earlier, while revenue from clothes fell 1 percent, the report said. Sales of autos have been falling because Japanese carmakers released more expensive, bigger models earlier in the year, the trade ministry said.
Sales at department stores dropped 1.3 percent in October from a month earlier, the first decline in three. Supermarket sales fell 3.2 percent from September, also the first decline in three months, the report said.
(Bloomberg News)