By Kaori Kaneko and Daniel Leussink
TOKYO (Reuters) – Japan’s household spending dropped for a third straight month in February, data showed on Tuesday, as emergency curbs to prevent the spread of the coronavirus hurt consumption and raised the risk of a more prolonged and bumpier economic recovery.
Separate data showed the nation’s inflation-adjusted real wages rose for the first time in a year in February, largely due to prices weakening as the pandemic continued to weigh on the economy.
Analysts are forecasting an economic contraction in the first quarter as a state of emergency in Tokyo and some other areas to contain a renewed spike in coronavirus cases pressures businesses, especially the service sector such as restaurants and hotels.
Household spending dropped 6.6% in February from a year earlier, after a 6.1% decline in January and compared with a median market forecast for a 5.3% fall, government data showed.
The month-on-month figures added to the hopeful signs, with spending up 2.4%, rebounding from a 7.3% fall in January and compared with a forecast of a 2.8% gain.
Japan has compiled massive monetary and fiscal stimulus over the past year to revive the economy after the pandemic sent it reeling into a record postwar slump earlier in 2020.
Beyond the first quarter, analysts expect a gradual recovery as solid global demand lifts Japan’s massive export sector and helps to offset some of the weakness in consumption.
Analysts are focusing on whether there will be more stimulus to bolster the economic rebound. Over the weekend, Japan’s ruling party executive signalled a chance of a supplementary budget for the current fiscal year to combat the economic blow from the pandemic.
(Reporting by Kaori Kaneko; Editing by Ritsuko Ando and Stephen Coates)
