TOKYO- Japanese household spending likely dropped in February from a year earlier, falling for a third straight month, a Reuters poll found, suggesting emergency steps to contain the coronavirus infection kept a lid on consumer expenditure.
A state of emergency declared in the Tokyo area to curb the spread of COVID-19 hurt service sector spending such as restaurants and bars, while demand for home appliances and food and beverage was likely to stand firm, analysts said.
Household spending is forecast to have fallen 5.3 percent in February from a year earlier after a 6.1 percent decline in January, the poll of 16 economists showed.
But compared with the previous month, household spending likely grew 2.8 percent in February, rebounding from a 7.3 percent drop in January, the poll found.
A decline in new coronavirus cases in February helped to improve consumer sentiment from January but a more recent rebound in infections clouds the outlook, analysts said.
“Spending on consumer goods were rather on the uptick in February led by firm demand for stay-at-home and remote working related items,” said Koya Miyamae, senior economist at SMBC Nikko Securities.
“On the other hand, spending on services likely remained lackluster. Consumer spending was expected to have picked up in February but the pace of recovery was slow.”
Japan’s economy has rebounded from a pandemic-induced deep slump last year. Many economists expect the economy contracted again in the January-March quarter because of emergency coronavirus curbs but then expect an export-led gradual recovery.