Japanese households increase spending for the first time in 4 months | Business and Economy

Spending rose 3.5 percent in June, amid a rebound in domestic travel.

Japanese households increased spending for the first time in four months in June as demand for travel services increased, a positive sign for a broader outlook for economic recovery.

Spending rose 3.5 percent in June from a year earlier, government data showed on Friday, posting the first year-over-year increase since January, as households opened their wallets to lodging, package holidays and outdoor gear.

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

Although the increase was larger than expected, concerns that Japan’s recovery will be slower than in other leading economies, such as the United States, are unlikely to be completely allayed.

Separate data on Friday showed that Japanese real wages fell for the third consecutive month in June as consumer prices rose faster than nominal wages, a worrying sign for household purchasing power.

A private sector survey earlier this week found that service sector activity growth stalled in July as rising inflation and uncertainty about the global economy hurt demand.

Some analysts have begun warning that Japan’s economic recovery may slow in the current quarter after an expected expansion in April-June following a modest recovery in consumer demand after the government lifted restrictions on COVID-19.

Friday’s data showed that spending also increased from the previous month, rising 1.5 percent on a seasonally adjusted basis.

That gain, which outperformed a forecasted 0.2 percent increase, rebounded from a sharp 1.9 percent drop in the previous month.

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