"A slump in exports has been hurting jobs and wages, reducing overtime work and winter bonuses. These factors will discourage consumer spending in coming months."
- BNP's Kato
Retail sales in the world's third biggest economy fell by the most in 11 months, a sign of faltering consumer spending which accounts for the majority of overall economic activity. Sales declined 1.2% from a year ago in October, down from 0.4% gain in the previous month. On monthly basis sales rose 0.7%. As the domestic demand weakened, and consumers are purchasing fewer cars and televisions, more pressure is added on the government to stimulate faltering economy that is likely to enter a recession by the end of this year. The government is expected to announce another round of stimulus on Friday, tapping around 1 trillion yen ($12.2 billion) in reserve funds.
"Japan's consumption has been losing steam since September, when the government terminated subsidies for energy- efficient car purchases," said Azusa Kato, an economist at BNP Paribas SA in Tokyo. "Weakening overseas demand has hurt employment and wages, discouraging spending," she said.
"A slump in exports has been hurting jobs and wages, reducing overtime work and winter bonuses," said BNP's Kato. "These factors will discourage consumer spending in coming months."
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