Japan household spending falls for 5th straight month in July

Household spending in Japan fell for the fifth straight month in a row during the period of July, declining less than what markets had earlier expected. However, the drop in consumer spending underlined the persisting weakness in domestic demand.

Japan’s household spending fell 0.5 percent in July, compared to the same period a year ago, data released by the Internal Affairs Ministry showed Tuesday. Compared with a month earlier, household spending rose 2.5 percent in July.

Moreover, consumption has stagnated even as a shrinking working-age population and gradual improvements in the economy led to a tightening job market, as companies remain wary of boosting wages for permanent workers for fear of irreversibly increasing fixed costs, Reuters reported.

"Overall, consumer spending remains weak as wage growth is dull. Households have been keeping their purse strings tight since the sales-tax increase in 2014," Bloomberg reported, citing Yoshiki Shinke, Economist, Dai-ichi Life Research Institute, Tokyo.

Meanwhile, the Japanese economy is struggling to regain momentum, as is evidence by slower growth in gross domestic product amid a softer labor market.