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Japan’s Retail Sales Figures Rebound Strongly

James Boston
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Japan’s Retail Sales Figures Rebound Strongly

A broad range of data out of Japan this morning and overnight is highlighting some buoyancy in the consumer sector and strong employment data but general weakness elsewhere in the economy. The August Housing Starts data is showing that this sector is continuing to decline but the pace at which it is doing so is slowing, the latest year on year number is recording a -12.5% fall in the number of new homes being built, this represents an improvement on the previous month’s number of -14.1% and market analysts that had been expecting a further drop to -14.2% were positively surprised. The annualised Housing Starts figure for the month of August now stands at 0.845M, up from the July number of 0.837M and ahead of the expected 0.839M. The pace of growth in overall Construction Orders however has fallen from 24.4% in July to just 8.6% last month, this can be a volatile figure and the anticipated level for August was an increase of 12%.

The latest unemployment data released overnight by Japan is showing an unexpected fall in the rate from 3.8% back to the record 3.5% first experienced in April. One of the bright spots in the Japanese economy is the low level of the unemployment rate. This is vital at this point in the Japanese efforts to kick start an economy that has been languishing for over a decade, the cripplingly high public debt could not sustain any deficit spending brought on by falling employment levels.

The consumer sector appears to be recovering from the hike in sales taxes imposed earlier in the year, potentially it is being spurred by the threat of further sales tax increases to come but for now the Retail Sales numbers are growing at strong pace. The month on month figure for August shows a 1.9% jump in sales compared to a fall of -0.5% in July and an estimate for expansion of only 0.5% in the latest figures.

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