Average household spending in March rose 5.2 percent from a year before in price-adjusted real terms, the Internal Affairs and Communications Ministry said Tuesday. Average spending by households with two or more members stood at 316,166 yen, the sharpest growth in about nine years since February 2004, when the figure rose 5.3 percent.
The growth was due to an increase in personal spending on such high-price items as wristwatches and on eating out at family restaurants and other places. Personal spending was given a boost by improved business sentiment on the back of rising share prices and other factors. According to the Cabinet Office, the index gauging consumer confidence improved for the third straight month in March, rising 0.6 point to 44.8.
With the increased consumer spending, corporate production activities are also are expanding. Industrial production in March rose 0.2 percentage point from the previous month, standing at 89.8 out of 100 for the base year of 2005, marking the fourth straight monthly increase, the Economy, Trade and Industry Ministry said in a report Tuesday. In the January to March period, the production index rose 1.9 points from the previous quarter due to increased production of automobiles and other goods, the first hike in four quarters.
The ratio of job openings to job seekers improved 0.01 point to 0.86-to-1 in March, the highest level since August 2008, when an equal ratio was reported. Koya Miyamae, an economist at SMBC Nikko Securities Inc., said the economy is turning around. "The economy has definitely entered a virtuous cycle.
High stock prices have improved personal spending and corporate production activities, which favorably affected employment," Miyamae said. More pressure on households? The pace of recovery is slow, however, as far as exports, one of the driving forces of the economy, are concerned. Export volume decreased 9.8 percent from a year before in March, according to foreign trade statistics. Some observers said it will take until this summer or later for export figures to clearly rise to reflect the weakening yen. An increase in the price of basic goods and services is another worrisome factor.
The March consumer price index shows gasoline and electricity prices continued to rise because of the yen's depreciation, and crude oil also remained high. The financial burden on households will inevitably increase, as salaries are unlikely to rise. It is important to implement strategies to induce growth to ensure continued economic recovery. The government will compile a new set of growth strategies and key economic policies in June.
Yusuke Shimoda, a researcher at the Japan Research Institute, said it is important for the government to devise growth strategies, including deregulation, and implement them faithfully to put the economy on a path toward recovery.
(The Japan News)