The FINANCIAL — Japanese retail sales jumped 5.0% from a year earlier in April, government data showed on May 28, regaining some ground after a tax-induced lull last year, according to Nasdaq.
But spending was almost flat from a month earlier, indicating that the effects of spring wage increases at large companies have yet to shore up overall consumer sentiment.
The sharp increase in April was largely due to the comparatively low figure a year earlier, when retail sales fell steeply following a sales tax increase in April 2014. It was the first increase in retail sales in four months, and came after a 9.7% fall the previous month. The most significant increases were in sales of cars, electronics and food items.
Compared with March, retail sales were up just 0.4%, suggesting that consumer appetites are recovering only slowly.
The government said retail sales are essentially flat but there is still weakness in some sectors. An official briefing reporters on the data said the assessment reflects the fact that sales of durable goods such as televisions, washing machines and cars "still haven't recovered to where they were before the sales tax increase" even though other sectors are improving.
The 2014 sales tax increase pushed Japan's economy into recession after household and business spending plunged.
Economists are closely watching trends in wages and consumption after many large companies boosted base pay in April, prodded by government officials. As companies report strong profits helped by a weak yen resulting from Prime Minister Shinzo Abe's stimulus policies, Tokyo wants to see some of the benefits passed on to workers. Higher wages, officials reason, will spur consumption, completing a virtuous cycle for a sustained recovery.
But some economists are skeptical of such a scenario, given that only a small segment of the overall workforce will benefit from the pay increases.
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