Japan's retail sales rose in July for the first time in five months, government data showed on Monday, as a heatwave helped boost sales of air conditioners and demand for televisions rose in the runup to the Olympics. But economists saw little to cheer about and remained wary about the outlook for personal consumption, which accounts for over half of the economy. Retail sales rose 0.8 percent in July compared with a year earlier, beating a median forecast of a 0.5 percent rise in a poll. Compared with June, retail sales rose a seasonally adjusted 0.7 percent, the Ministry of Economy, Trade and Industry said. But sales at large stores were down 1.5 percent year-on-year on a same-store basis. "The data shows that retail sales were in part lifted by the hot summer, the Athens Olympics ... But sales of items such as clothing didn't do well and I don't think we can be too happy with the data," said Kiichi Murashima, director of economic and market analysis at Nikko Citigroup. Retail sales figures were also boosted by a rise in the component for fuel costs. The stronger-than-expected data follows soft household spending and jobs data released last Friday that muddied the outlook for the world's second-biggest economy.
Personal consumption has been picking up as Japan's economic recovery broadens but a sharp rise is seen unlikely due to a slow recovery in wages. Data last week showed average spending by Japanese wage-earner households fell 2.5 percent in July from the previous month, following falls of 3.5 percent month-on-month in June and 2.7 percent in May. But on a year-on-year basis, spending was up a real 2.9 percent. "Digital appliances such as DVDs and other items should continue selling well for a while and retail sales for August, September and a few months ahead shouldn't be too weak," said Takehiro Sato, an economist at Morgan Stanley in Tokyo. "But demand may weaken towards the end of the fiscal year (next March). Consumption has recovered mainly because people are less worried about losing their jobs, but that could prove temporary." Nikko Citigroup's Murashima said: "The retail sales growth earlier this year seems to have been led by sentiment and consumers using their savings rather than any improvement in wages." Japan's gross domestic product (GDP) grew an annualised 1.7 percent in real, price-adjusted terms in April-June, weaker than most economists had forecast, but the figure is expected to be revised up. As a new set of data for July has recently been unveiled, economists are seeking clues to how Japan's economy is performing in the July-September quarter. Most economists and government officials believe the economy will continue recovering steadily in the coming months, though at at a slower pace. The government expects the economy to grow 3.5 percent for the fiscal year ending next March.///