Japan's retail sales rose in July for the first time in five months, government data showed on Monday, as a heatwave helped boost sales of air conditioners and demand for televisions rose in the runup to the Olympics.
But economists remained wary about the outlook for personal consumption, which accounts for over half of the economy.
Retail sales rose 0.8 percent in July compared with a year earlier, the Ministry of Economy, Trade and Industry (METI) said, beating a forecast of a 0.5 percent rise in a Reuters poll.
Compared with June, retail sales rose a seasonally adjusted 0.7 percent, while wholesale sales, a leading indicator for retail sales, jumped 5.8 percent from the year-ago period, the highest rise since March 1991.
Economists, however, saw little to cheer.
"The data shows that retail sales were in part lifted by the hot summer and the Athens Olympics," said Kiichi Murashima, director of economic and market analysis at Nikko Citigroup.
"But sales of items such as clothing didn't do well and I don't think we can be too happy with the data," he added.
Sales at large stores, another indicator for consumer trends, fell 1.5 percent year-on-year on a same-store basis.
Finance Minister Sadakazu Tanigaki remained confident, however, saying robust private demand was supporting Japan's recovery.
"We are seeing a firm recovery that is spreading from the corporate to the household sector," he told a business seminar.
Naomichi Miyazawa, director at the office of industrial statistics at METI, said that although summer items such as soft drinks, ice cream and T-shirts boosted retail sales, more expensive clothing such as business suits and fresh food like beef did not sell well because of the hot weather.
But air conditioners and pre-Olympics demand for flat-screen TVs and DVDs led to a 7.6 percent jump in machinery sales and higher oil prices resulted in a 9.5 percent rise in the component for fuel costs, pushing up overall retail sales, he added.
Financial markets reacted little to the data, focusing more on Japan's industrial output figures due on Tuesday and upcoming US jobs data to be released on Friday.
The stronger-than-expected retail numbers followed soft household spending and jobs figures released last Friday that clouded the outlook for the world's second-biggest economy.
Data last week showed spending by Japanese wage-earner households fell in July compared with a month earlier, marking the third straight month of decline, while the jobless rate worsened to 4.9 percent in July from 4.6 percent in June.
Economists also said a slow recovery in wages and job conditions could weigh down consumption later in the year.
"Digital appliances such as DVDs and other items should continue selling well for a while and retail sales for August, September and a few months ahead shouldn't be too weak," said Takehiro Sato, an economist at Morgan Stanley in Tokyo.
"But demand may weaken towards the end of the fiscal year (next March). Consumption has recovered mainly because people are less worried about losing their job, but that could prove temporary."
The ministry maintained its assessment on retail sales that there were signs of recovery. METI's Miyazawa told reporters that while the positive impact from the hotter summer would likely continue in August, sales of autumn clothing could be hurt if the heatwave continues for too long.
Japan's economy grew an annualised 1.7 percent in real, price-adjusted terms in April-June, weaker than most economists had forecast, but the figure is expected to be revised up.
Economists have been dissecting July's round of data for clues on how Japan's economy has been performing in the July-September quarter.
Most economists and government officials believe the economy will continue recovering steadily in the coming months, though at a slower pace. The government expects the economy to grow 3.5 percent for the fiscal year ending next March.
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