BOJ: Japan Sep Supply-Side Consumption Index Up; Q3 Up 0.5%

The Bank of Japan said Tuesday its Consumption Activity Index rose a real 0.1% on a seasonally adjusted basis in September, the first rise in two months.

The slight increase followed -0.7% in August and +1.1% in July. As a result, the index rose 0.5% on quarter in July-September after falling 0.1% in April-June and 0.3% in January-March.

The BOJ’s consumption indicator reflects a wide range of sales and supply-side statistics on goods and services and helps capture the short-term consumption trend. It has a close correlation to final gross domestic product figures.

The index continued to show private consumption hasn’t gain upward momentum.

Government data showed that real average household spending fell 2.1% on year in September for the seventh straight drop as against -4.6% in August as consumers remain cautious amid uncertain economic growth prospects.

The Cabinet Office index, called Private Consumption Integrated Estimates, slumped 1.2% on the month in August, marking the first drop in four months after rising 0.5% in July and remaining flat in June. A series of typhoons dampened spending on restaurants and tourism. The September data isn’t yet available.

However, the core spending index, which excludes housing, motor vehicles and other volatile items (close to private consumption patterns in GDP data), rebounded 2.1% on month in September on a seasonally adjusted basis after -2.3% in August and +0.3% in July.

The Cabinet Office will release preliminary GDP data for the third quarter at 0850 JST on Monday, Nov. 14 (2350 GMT on Nov. 13).

The median forecast for private consumption, which accounts for about 60% of GDP, is for a 0.1% drop on quarter in Q3 (ranging from -0.3% to unchanged) following a 0.2% rise in Q2.

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