Japan’s households raise spending for first time in 4 months

Japan’s households increased spending for the first time in four months in June, as demand for travel services rose in a positive sign for broader economic recovery prospects.

Spending jumped 3.5 percent in June from a year earlier, government data showed on Friday, posting its first year-on-year rise since January as households opened their purse strings for overnight stays, package tours and outdoor goods.

The data, which was stronger than the median estimate for a 1.5 percent rise in a Reuters poll, showed people spent less on fish and vegetables, while also spending more on transportation.

While the rise was larger than expected, it was unlikely to completely dispel worries that Japan’s recovery will remain slower than those seen in other leading economies such as the United States.

Separate data on Friday showed Japan’s real wages extended declines for a third straight month in June, as consumer prices rose faster than nominal wages in a worrying sign for households’ purchasing power.

A private sector survey earlier this week showed growth in services sector activity stalling in July as rising inflation and uncertainty about the global economy hurt demand.

Some analysts have started to warn that Japan’s economic recovery may slow in the current quarter following an expected expansion in April-June due to a modest rebound in consumer demand after the government lifted COVID-19 curbs.

Friday’s data showed spending also rose from the previous month, gaining 1.5 percent on a seasonally-adjusted basis.

That gain, which was stronger than a forecast 0.2 percent rise, marked a rebound from a sharp 1.9 percent decline in the previous month.