Japan’s Household Spending Grew at a Fastest Rate in Three Years

Household spending rose in August at the fastest annual rate in three years due to higher consumption, implicating a steadfast domestic demand that could balance out rising trade tension.

The optimistic data on Friday worries some analysts with the possibility of a slower economy in three months from July when Japan encounter some unwanted natural occurrences such as heavy rains, typhoons, earthquake and heat waves.

However, another data from the central bank shows households to be a lot more subdued compared three months ago, focusing on the recovery of Japan from natural events.

Household consumption of Japan grew to 2.8 percent in August than 12 months ago, surprising market expectations of a 0.1 percent decline and increasing at the fastest rate since August 2015 as shown by the reports from the government. There were gains for two succeeding months after a 0.1 percent increase in July.

Spending picked up following a downfall earlier this year as more people spent their bonuses on higher cost products such as automobiles and air conditioners, a government official said.

Most of the analysts anticipated spending to drop in August which is expected to have a hot climate and lot of typhoons keeping household from buying out.

On a good note, a tighter job market sprung up the household income, supporting the household spending resulting to 50 percent of Japan’s economic activity. However, the figure for spending is not enough to kickstart production companies to raise their prices, keeping inflation far from the BOJ’s two percent target.

Household spending may have lessened the worries of policymakers, some risks are still present to obscure the economic outlook.