TOKYO, May 27 - Japanese retail sales fell for the 25th straight month in April, pushed down by weak demand for cars and clothing as a poor outlook for unemployment and wages had consumers keeping a lid on spending. Retail sales dropped by a preliminary 2.7 percent from the same month a year earlier, the Ministry of Economy, Trade and Industry (METI) said on Tuesday.
Japan's consumers, among the world's most avid shoppers, had been helping to cushion the economy recently, willing to dip into savings to keep buying. But analysts say this trend is ending as the outlook for the economy dims and people switch to rebuilding their savings on the expectation of rainy days ahead.
"Corporate earnings announcements show companies are seeing a rise in profits despite a fall in sales and that's dependent on job cuts, so the outlook for households is not good," said Yoshimasa Maruyama, economist at Mizuho Research Institute. "The April retail sales are likely to have been affected by very bad weather on weekends, which hurt department store sales. But even without that factor the overall trend is weak."
Exports, one of the main drivers of the economy, are set to weaken as conditions in Japan's main markets of Asia and the United States slow, forcing many firms to look at cutting costs to maintain profits. Those cuts could come as reduced wages and bonuses -- a key part of Japanese households' disposable income -- and as staff reductions. A poll last week showed Japan's unemployment rate likely stayed at 5.4 percent in April, just shy of an all-time high 5.5 percent.
A METI official told a news conference that the government maintained a cautious view on the retail industry. "It continues on a weakening trend," he said. Sales of cars in April fell for the first time in eight months, signalling an end to the strong run that automakers have had in recent months thanks to demand for small cars aimed at young city dwellers. The METI official noted that a reduction in tax incentives for energy-efficient cars that took effect from April contributed to the fall.
Clothing sales were also weak, as cool, wet weather cut demand for spring fashions. Sales of personal computers continued to decline, offsetting stronger demand for DVD players and camera-equipped mobile phones. Even Japan's love affair with convenience stores seems to be cooling. Sales growth in April at the 24-hour chains -- which offer an array of services, from hot meals to bill paying -- slowed to 0.5 percent, the lowest in eight months. Retail sales at large stores fell a preliminary 3.9 percent year-on-year on a same-store basis, METI said.//