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Japan retail sales show signs of improvement in July despite prevailing economic uncertainty

Retail sales in Japan during the month of July, showed signs of improvement, falling by the smallest margin in five months in July, a possible indication that consumers may become less cautious about spending despite slow wage growth and uncertainty over the global economy.

Japan’s retail sales fell at an annualized 0.2 percent in July, following a 1.3 percent decline the previous month, data released by the Ministry of Economy, Trade and Industry showed Tuesday. A median estimate of economists called for a 0.9 percent year-over-year drop.

Further, sales at large-scale retailers rose 0.6 percent on year, after adjustment for the change in the number of stores, the first increase in five months. Also, the country’s private consumption has lagged in wake of slower wage growth, exaggerated by a stronger yen, which in turn, weighed on profits, cautioning firms against pay hikes.

Sales from large retailers climbed 0.6 percent on year, missing expectations for 0.9 percent after tumbling 1.5 percent in the previous month. On a monthly basis, retail sales jumped 1.4 percent, beating forecasts for 0.8 percent and up from 0.3 percent a month earlier.

Moreover, department store and supermarket sales grew 0.6 per cent year-on-year in July, up from a 1.5 per cent contraction the previous month. Meanwhile, the better retail sales figure dovetails with data earlier this morning that showed a moderation in the country’s household spending.

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