Japan retail sales mark biggest decline in 4 years

TOKYO - Japan's retail sales sank 2.7 percent in December, the biggest drop in nearly four years in December and the fourth straight monthly decline, as consumers nervous about jobs and wages pruned spending.

Sales in the world's second-biggest economy slumped to 13.03 trillion yen ($144 billion), the government said Thursday. The figure marks the steepest year-on-year decline since February 2005 and follows a 0.9 percent drop in November.

The latest numbers suggest that the impact of Japan's deepening recession is now hitting both work and home, forcing consumers to spend less on food, clothes and appliances amid growing economic distress.

"The fall of the sales was broad based in terms of sector categories, underscoring that the current contraction of economic activities is extensive," said JP Morgan economist Masamichi Adachi in a note to clients.

Plunging demand worldwide is crippling Japanese companies of all sizes. They are cutting workers, slashing production and warning investors that business is likely to get worse in the coming months.

Sony Corp., scheduled to release quarterly earnings results later Thursday, will likely post its first loss in 14 years for the full fiscal year through March 31.

In the October-December quarter, retail sales fell 1.5 percent from the same period the previous year.

The pullback in consumer spending, which accounts for more than half of Japan's gross domestic product, led department store operator J. Front Retailing Co. this week to scrap plans for two new locations in northern and central Japan.

Retail sales among large-scale department stores and supermarkets tumbled 6.3 percent on-year in December, falling for the ninth consecutive month.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.