- Kazuhiko Ogata, the chief Japan economist at Credit Agricole
Japan retail sales unexpectedly dropped for the third month in a row in January, indicating continuing softness in consumer sentiment and suggesting consumer demand is unlikely to spur a recovery in growth this quarter. Sales slid 0.1% year-on-year in January, compared with economists' forecast for a 0.2% increase. Measured on a monthly basis, retail sales dropped 1.1% in January, the Ministry of Economy, Trade, an Industry reported. Weak consumer spending has been a drag on overall growth of the world's third biggest economy in recent quarters. Gross domestic product contracted 1.4% in the fourth quarter amid bigger-than expected decline in household spending. Private consumption decreased 0.8% over the fourth quarter, subtracting 0.5 percentage points from GDP growth. Meanwhile, a separate report showed Japan's industrial output increased 3.7% in January, up for the first time in three months. Manufacturers predict output to decline 5.2% in February and increase 3.1% in March.
Prime Minister Shinzo Abe's three-arrowed based economic strategy, which includes monetary expansion, fiscal stimulus and structural reforms, has seen the economic performance of the world's third biggest economy patchy at best so far.
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