Japanese shoppers slow spending spree
By Tetsushi Kajimoto |
June 29, 2010, Tuesday
|
Print Edition
Print Edition
JAPAN'S retail sales in May rose at their slowest annual pace in four months in a sign that stimulus-driven consumption may be losing momentum as the export-led economic recovery is expected to moderate in the coming quarters.
Retail sales have been surging since the start of this year, helped by government subsidies for purchases of cars, electronics and other durable goods. But analysts warn this boost is starting to wane as such subsidies expire later this year, boding ill for the economic recovery.
A slowdown in consumer spending later this year could increase scrutiny of Prime Minister Naoto Kan's economic growth strategy, whose government is trying to appeal to voters before an upper house election on July 11 that it must win to smoothly pass bills into law.
"The slowdown in retail sales suggests the effect of (government) incentives on energy-efficient cars is peaking, and this is not good news for the overall economy's recovery that has so far been heavily dependent on stimulus," said Seiji Shiraishi, chief economist for Japan at HSBC Securities in Tokyo.
"Personal consumption made a considerable contribution to the economy's growth in the first quarter but not much contribution is expected in the second quarter, meaning overall growth will slow down as expected."
Retail sales rose 2.8 percent in May from a year earlier, the slowest pace since January. That followed a 4.9 percent rise in April, the fastest annual increase since March 1997, the Ministry of Economy, Trade and Industry said yesterday.
May's rise was less than the median estimate for a 4.6 percent gain.
Retail sales rose in May from a year earlier mostly because higher oil prices boosted the retail cost of fuel, a government official said.
The data also showed that sales of products subsidized by the government are starting to slow. Vehicle sales rose 13.3 percent in May from a year earlier, slowing from 19.5 percent growth.
Retail sales have been surging since the start of this year, helped by government subsidies for purchases of cars, electronics and other durable goods. But analysts warn this boost is starting to wane as such subsidies expire later this year, boding ill for the economic recovery.
A slowdown in consumer spending later this year could increase scrutiny of Prime Minister Naoto Kan's economic growth strategy, whose government is trying to appeal to voters before an upper house election on July 11 that it must win to smoothly pass bills into law.
"The slowdown in retail sales suggests the effect of (government) incentives on energy-efficient cars is peaking, and this is not good news for the overall economy's recovery that has so far been heavily dependent on stimulus," said Seiji Shiraishi, chief economist for Japan at HSBC Securities in Tokyo.
"Personal consumption made a considerable contribution to the economy's growth in the first quarter but not much contribution is expected in the second quarter, meaning overall growth will slow down as expected."
Retail sales rose 2.8 percent in May from a year earlier, the slowest pace since January. That followed a 4.9 percent rise in April, the fastest annual increase since March 1997, the Ministry of Economy, Trade and Industry said yesterday.
May's rise was less than the median estimate for a 4.6 percent gain.
Retail sales rose in May from a year earlier mostly because higher oil prices boosted the retail cost of fuel, a government official said.
The data also showed that sales of products subsidized by the government are starting to slow. Vehicle sales rose 13.3 percent in May from a year earlier, slowing from 19.5 percent growth.
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