By Daniel Leussink
TOKYO (Reuters) – Japan’s household spending posted an annual drop for the third straight month in October, though the pace of decline slowed, as consumer sentiment struggled to fully shake off the drag from the coronavirus pandemic.
The world’s third-largest economy has lagged other nations in its recovery from the health crisis, mostly due to sluggish consumption. Analysts expect consumer sentiment to pick up this quarter as local COVID-19 infections fell.
Household spending fell 0.6% in October from a year earlier, after a 1.9% decline in September and a 3.0% drop in August, government data showed, matching the median market forecast in a Reuters poll.
The month-on-month figures were positive, posting a sharp 3.4% rise after state of emergency curbs to contain the virus ended in September. That was slightly weaker than a forecast of a 3.6% gain.
Policymakers are hoping a rebound in domestic demand will support the economy as manufacturers navigate a global chip shortage and are hit by surging raw material prices.
But separate data on Tuesday showed inflation-adjusted real wages slumped 0.7% year-on-year in October, falling for the second straight month and boding ill for a sustainable recovery of consumer sentiment.
The Japanese government unveiled a $490 billion spending package last month as it seeks to put its economy firmly on a recovery track, going against a global trend of unwinding crisis-mode stimulus.
(Reporting by Daniel Leussink; Additional reporting by Kantaro Komiya; Editing by Sam Holmes)
