Daily Management Review

Japan's May Retail Sales Grows For The 3rd Straight Month


Japan's May Retail Sales Grows For The 3rd Straight Month
With Japanese households expending more, there was surge in retail sales in the country in May that beat analysts’ expectations. However, Covid-19-linked pressures continued to put pressure on the underlying trends in consumption which again suggested that the complete recovery of the third largest economy of the world will take longer.
Japan is set to host the Olympic Games next month but analysts expect that there will barely be any growth in the Japanese economy in the second quarter since the growth outlook was hit by extension of the pandemic related emergency curbs.
Even as some3 of the major global economies such as that of the United States showing strong recovery from the Covid-19 induced shrinkage, policy makers in Japan are being pressurised to take fresh supportive measures over and above the massive existing stimulus for boosting demand because of the slow rate of economic recovery of the country.
According to government data published on Tuesday, there was a 8.2 per cent year on year jump in retail sales in Japan in May marking the third straight month of growth, which was also higher than the median market forecast for a 7.9 per cent gain.
According to Takeshi Minami, chief economist at Norinchukin Research Institute, even though better than expected surge in retail sales, it was not adequate enough for experts to make any definitive conclusion that the economy was shifting towards a brighter outlook for spending conditions, said Takeshi Minami, chief economist at Norinchukin Research Institute.
"Many elderly were unlikely to go out and spend money in April and May as there was still a state of emergency or quasi-emergency measures (in major areas)," said Minami. "It's hard to imagine that the Olympics will set off a spending rush," he said and added the risks of another resurgence in Covid-19 cases could put pressure on consumption in the future still persists.
The data showed that year-on-year gains in spending on items such as general merchandise, clothing, cars and fuel underpinned the broader rise in retail sales even though the statistical base effects reflected the large of the number last year because of the pandemic hit.
However compared to the previous month, there was a 0.4 per cent drop in retail sales on a seasonally adjusted basis which was a sign that indicated a trend of losing steam for spending by Japanese consumers.
The seasonally adjusted unemployment rate for the entire of Japan was higher at 3 per cent which was above the previous month's 2.8 per cent and a median forecast of 2.9 per cent, showed separate data.
There were 1.09 jobs per applicant in May, unchanged from April, labour ministry data showed.