Japan retail sales suffer first annual fall in a year

Annual Japanese retail sales fell for the first time in a year last month, government data showed on Wednesday, as poor weather including two typhoons kept consumers away from stores and restaurants.

Retail sales edged down 0.2 percent in October compared with the same month last year, led by weak sales of food and beverages, the Ministry of Economy, Trade, and Industry said.

A shopper looks at items inside a discount store at a shopping district in Tokyo, Japan

The result matched the median forecast of economists polled by Reuters and marked the first decline since October last year.

October’s fall in retail sales follows a rare decline in overall private consumption in the July-September quarter, but economists see the downturn as temporary due to one-off factors.

Consumer confidence is at four-year highs, emboldened by an economy that has grown for seven straight quarters - its longest expansion in 16 years - while expectations are growing for bigger increases in wages.

“Basically the recovery trend is continuing,” Hidenobu Tokuda, senior economist at Mizuho Research Institute, said of consumer spending, noting that high stock prices were one factor that would encourage consumption.

October retail sales were also hurt by having one less Saturday on the calendar than the same month last year.

Sales of food and beverages fell 1.5 percent from a year earlier, the first drop in eight months.

Machinery and equipment sales slipped 0.9 percent on weaker sales of smartphones and computers, with some consumers holding off purchases ahead of smartphone launches in November, a ministry official said.

At large-scale retailers - department stores and supermarkets - sales fell 0.7 percent from a year earlier after adjustment for change in the number of stores.

In the plus column, fuel sales jumped 6.0 percent as energy prices rose, while automobile sales gained 3.2 percent for their 15th straight month of rises, benefiting from new model roll-outs.

Wednesday’s retail sales report is the first piece of major consumption data for the current quarter, and kicks off a busy slate of October indicators over the coming days.

Also on the consumer spending front, household spending, due on Friday, is expected to have slipped. But the jobless rate is forecast to have held at a 23-year low, and the government hopes the tight labor market will soon lead to higher wages and bolster consumption.

“Given that household incomes are growing at a healthy pace and consumers are in high spirits, we are confident that consumer spending will rebound before long,” Marcel Thielant, senior Japan economist at Capital Economics, said in a note.

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