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Hot Weather Lifts Japan's September Retail Sales 0.5%

Japanese retail sales rose unexpectedly in September from a year earlier, government data showed on Monday, suggesting consumer spending may be picking up in accordance with moderate improvement in workers' income conditions.

Retail sales rose for a second straight month in September, increasing 0.5 percent from a year earlier, bolstered by hotter weather and two long weekends during the month. The unseasonably warm weather lifted purchases of sun-blocking cosmetics, soft drinks and gasoline, the Ministry of Industry, Trade and Economy said. Economists' had forecast a 0.7 percent fall.

Two three-day weekends in the month also helped, the ministry said, as fuel sales rose 1.2 percent and miscellaneous retail, including makeup sales, added 2.1 percent. However, the weather also reduced demand for autumn clothing and accessories, with clothing sales falling 1.1 percent on year.

Despite the second consecutive monthly rise in sales, the ministry left its assessment for retail sales unchanged as flat overall.

The retail figures "don't necessarily show consumer spending is on a recovery trend," said Tetsuro Okada, senior economist at Japan Research Institute. "The consumption situation remains vulnerable to uncertain factors such as the weather."

But most economists do expect consumer spending, which accounts for more than half of Japan's economic activity, to stay firm as workers' income conditions are improving, albeit gradually.

Last week, Japan said consumer prices fell in 0.1 percent in September from the year before. The reading marked the eight straight month of declines, suggesting that Japan has yet to escape from deflation, or a spiral of falling prices.

The government also downgraded its assessment on the housing market for the first time in six months in its monthly report on the economy.

Japan's economy contracted 0.3 percent in April-June due to a slump in capital spending, but economists think exports will drive the economy's growth in July-September. A weak economy could make it difficult for the Bank of Japan to raise its benchmark interest rate, currently at 0.5 percent. The BOJ last hiked the rate in February.

Contact Asia Economy

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