TOKYO- Japan’s retail sales rose for the first time in three months in October, though less than expected, and the underlying private consumption trend pointed to persistent strains on a fragile economic recovery despite an easing of COVID-19 curbs.
Following a larger-than-expected contraction in July-September, analysts expect the world’s third-largest economy to rebound this quarter thanks to an upturn in household spending, while supply-side concerns still loom for export-reliant businesses.
“However, as people are still wary of another virus wave, they’re not going out and spending actively,” said Masato Koike, senior economist at Dai-ichi Life Research Institute, adding that stagnant wage growth is an additional headwind to fostering solid consumption growth.
Retail sales rose 0.9 percent in October from a year earlier, government data showed on Monday, versus the median market forecast for a 1.1 percent increase. It followed an upwardly revised 0.5 percent drop in September.
A 25.9 percent surge in fuel sales due to rising petroleum product prices boosted the headline retail figure, while sales of goods other than fuel fell 1.2 percent year-on-year.
Worryingly, car sales were down 19.5 percent from a year earlier, the biggest monthly drop since January 2011, dragged down by supply constraints, according to a government official.
Compared with the previous month, retail sales grew 1.1 percent on a seasonally adjusted basis in October, following an upwardly revised 2.8 percent gain in September.
Japan has eased coronavirus restrictions on restaurant hours, large-scale events and border controls as infections have fallen dramatically and more than three-fourths of its population is fully vaccinated.
Private-sector statistics, however, had shown the comeback of consumer spending was gradual in October, and analysts said a full recovery in sectors hit hard by the pandemic such as face-to-face services will take longer time.
