January 31, 2020 / 3:45 AM / a month ago

Japan December household spending seen falling at slower rate: Reuters poll

FILE PHOTO: A woman holding a parasol looks at a menu board in front of a restaurant at a shopping district in Tokyo, Japan, July 20, 2018. REUTERS/Kim Kyung-Hoon

TOKYO (Reuters) - Japan’s household spending likely fell at a slightly slower pace in December as the effects of a nationwide sales tax hike ebb though shoppers may still cut back on consumption for some time, a Reuters poll showed on Friday.

Fourteen analysts surveyed estimated December would show a fall of 1.7% from a year earlier.

Following the tax hike to 10% from 8%, household spending tumbled 5.1% in October, its fastest pace of decline since March 2016, and fell 2% in November.

On a month-on-month basis, household spending was seen edging up 0.2% in December, following a 2.6% gain in November.

“Negative effects from the tax hike are slowly tapering off,” said Kenta Maruyama, economist at Mitsubishi UFJ Research and Consulting. “Still, it will take time for private consumption to stage a fully-fledged recovery.”

While the effects on spending from a China virus outbreak will not have shown up in data yet, analysts expect it will hit consumption in the coming months as tourism dips.

Japan now has 14 confirmed cases of the new coronavirus, an epidemic that is believed to have originated in the Chinese city of Wuhan.

The government will publish household spending data at 8:30 a.m. on Feb. 7 (2330 GMT, Feb. 6).

The world’s third-largest economy grew an annualized 1.8% in July-September thanks to firm domestic demand but economists see a contraction in the fourth quarter as the sales tax hike hurt consumer spending and U.S.-China trade frictions hit exports.

Reporting by Tetsushi Kajimoto; Editing by Jacqueline Wong

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