Japan household spending rises but wages down in April

 Japan household spending rises but wages down in April

By Kaori Kaneko and Stanley White

TOKYO (Reuters) - Japan's household spending rose for a fifth straight month in April but real wages declined, adding to worries about consumption as global trade frictions weigh on broader economic activity.

Household spending grew 1.3% from a year earlier, government data showed on Friday, compared with a median market forecast for a 2.6% increase.

But separate data showed inflation-adjusted real wages fell 1.1% in April from a year earlier, a bad sign for consumer spending.

A pickup in domestic consumption is important for the Bank of Japan to achieve its 2% inflation target. Weak spending has held back many firms from raising prices for years for fear of losing customers.

Now, however, businesses face additional uncertainty about whether consumption will be able to grow enough to offset weakness in exports as escalating global trade frictions hurt corporate sentiment.

Japan is set to raise a sales tax to 10% from 8% in October unless a major economic shock prevents them from doing so.

The economy in the first quarter showed weakness in private consumption and capital expenditure. But many economists said recent gains in business spending suggested upward revisions to capital spending and overall economic growth in the quarter.

Data for revised gross domestic product (GDP) for January-March will be released on Monday.

(Reporting by Kaori Kaneko; Editing by Sam Holmes)

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Updated Date: Jun 07, 2019 06:05:14 IST