By Kantaro Komiya
TOKYO (Reuters) – Japan’s household spending fell in September as consumers remained cautious about COVID-19, reinforcing views the world’s third-largest economy contracted in the third quarter.
The data underscored the need for policymakers to shore up domestic consumption as the global supply crunch hits the export-reliant economy.
Spending fell 1.9% year-on-year in September, after a 3.0% decrease in August, government data showed on Friday. It was a better reading than a median market forecast for a 3.9% slip in a Reuters poll.
In seasonally adjusted month-on-month terms, spending jumped 5.0% in September, marking the first increase in five months, beating expectations for 2.8% growth.
Many economists expect a contraction in Japan’s third-quarter output, due in part to disappointing industrial output figures, which kept falling on car production cuts.
Beyond carmakers, supply shortages in semiconductors and other components produced in coronavirus-hit Southeast Asia have caused a ripple effect in other parts of the Japanese economy. Growth in exports has slowed while private consumption stagnated because of car sales slumps.
The government is due to release a preliminary gross domestic product estimate for July-September on Nov. 15.
To prop up Japan’s relatively tepid economic recovery, Prime Minister Fumio Kishida pledged earlier this week to compile a “large-scale” stimulus package in mid-November.
(Reporting by Kantaro Komiya; Editing by Sam Holmes and Richard Pullin)
