Japan’s retail sales rise for 3rd month, but overall trend still soft

Retail sales jumped 8.2% in May from a year earlier, the third straight month of growth, government data showed on Tuesday, a larger rise than the median market forecast for a 7.9% gain.

Despite the better-than-expected rise in retail sales, the jump was not strong enough to mark a definite shift towards a brighter outlook for spending conditions, said Takeshi Minami, chief economist at Norinchukin Research Institute.

“Many elderly were unlikely to go out and spend money in April and May as there was still a state of emergency or quasi-emergency measures (in major areas),” said Minami.

The broader rise in retail sales, which was largely due to statistical base effects that reflected last year’s slide, was underpinned by year-on-year gains in spending on items such as general merchandise, clothing, cars and fuel, the data showed.

But compared with the previous month, retail sales lost 0.4% on a seasonally adjusted basis, in a sign the trend for spending by Japanese consumers was losing steam.

Separate data showed the nationwide seasonally adjusted unemployment rate was up at 3.0%, above the previous month’s 2.8% and a median forecast of 2.9%.

There were 1.09 jobs per applicant in May, unchanged from April, labour ministry data showed.

The world’s third-largest economy is set to expand by an annualised 0.5% in the current quarter after posting a sharp 3.9% annualised drop in January-March, according to the latest Reuters poll data.