Japan’s September Spending Up Despite Real Wages

In October, households of Bloomberg Japan boosted spending for a second consecutive month despite falling real wages and accelerating inflation, marking a better than expected start to the final quarter of the year.

The ministry of internal affairs reported Tuesday that outlays rose 1.1% from September, led by gains in clothing and entertainment. Spending increased by 1.2% from a year ago, more than the increase predicted by analysts.

The country has a recovery path, and the spending data shows that there is a lot of resilience. Economists predict that Japan's economy will grow again this quarter, pushed up by private sector spending and services consumption.

A travel subsidy program for residents and the reopening of Japan's borders to international visitors has boosted demand for tourism, resulting in the 91% revision of its net income view for the fiscal year 2023 by airline operator ANA Holdings.

Retail sales went up in September from the previous month, reflecting brisk demand for shopping.

The tourism industry was probably supported by the giving of a slight offset, nationwide travel subsidies, which were available from October 11, as well as a boost to spending. Retail sales jumped by 0.2% in September from the previous month. Real wages fell for a seventh month, falling by the most since 2015, according to a separate report. The real decline of 2.6% and the nominal gain of 1.8% fall far short of the wage hopes of Bank of Japan Governor Haruhiko Kuroda.

He believes that Japan needs to grow at around 3% to get to the central bank's 2% sustainable price goal.

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