Japan’s Household Spending Contracts For Third Consecutive Month

Arslan Butt•Tuesday, April 6, 2021•1 min read

Household spending across Japan posted a decline for the third consecutive month during February, on account of fresh restrictions imposed by the government to tackle the latest wave of coronavirus infections. Data released by the government earlier today reveals that household spending fell by 6.6% in February, worse than the 6.1% drop seen in January.

The figure also came in worse than economists’ forecast which was for a decline by 5.3% instead. On a monthly basis, however, household spending rose by 2.4% since January, which was less than economists’ expectations for a 2.8% gain but far better than the 7.3% MoM change seen in the previous month.

The fresh spike in cases across Tokyo and some other parts of Japan has kept spending under pressure and is expected to drive a contraction in the economy during the first three months of 2021. The most affected has been the services sector, especially restaurants and hotels.

However, in the current quarter, the world’s largest economy could experience some respite on the back of improving external demand which could power recovery from the crisis. However, consumption levels could remain weak for some more time to come – a concern that has affected Japan even before the pandemic struck.

The extended damage driven by the pandemic has forced Japan’s ruling party executive to hint at a possible supplementary budget that can help support the economy. Despite massive stimulus efforts rolled out by the government and central bank, multiple waves of the pandemic have impeded recovery and continue to weigh on the economy.

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Arslan Butt

Index & Commodity Analyst

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.