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Japanese retail sales fell from year-ago levels for the third straight month in October as unusually frequent typhoons kept shoppers at home, raising doubts about whether consumer spending could support a slowing economy. October retail sales were down 1.4 percent from a year earlier, data from the Ministry of Economy, Trade and Industry (METI) showed on Monday. They were down 0.1 percent from September on a seasonally adjusted basis.
The annual decline was steeper than a market consensus forecast for a 0.5 percent decline and compared with a 0.3 percent decline in September,"
"It's certainly disappointing. It seems the weather or the earthquake in Niigata is continuing to be a factor," Peter Morgan, senior economist at HSBC Securities.
Sales at large stores, on a same-store basis, were down 4.1 percent from a year earlier.
An unusually large number of typhoons hit Japan in October, damaging homes and stores and keeping shoppers at home. Most of them struck at weekends, exacerbating the dent on retail sales.
In addition, a strong earthquake devastated parts of the Niigata prefecture in northern Japan late that month.
Although private sector consumption, which accounts for about 55 percent of Japan's gross domestic product (GDP), has rarely been robust for the last decade and a half, the figures come at a time when Japan's main growth engine - exports - is showing signs of fatigue amid a global slowdown.
In the July-September quarter, in which GDP rose a meagre 0.1 percent from the previous quarter, net exports turned into a negative contributor to growth for the first time in eight quarters and domestic consumption underpinned the economy.
Seiji Adachi, senior economist at Deutsche Securities, said retail sales reflected only part of overall consumption and there was no need to be overly pessimistic.
"It may seem to contradict with GDP or household spending data that are showing resilience in consumer spending," he said.
"This is probably because the increase in spending is focused on such items as education and medical costs that do not necessarily show up in retail sales statistics," he added.

Copyright Reuters, 2004

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