Once again Japanese retail sales beat expectation in May as households continued to loosen the purse strings.
Despite this, underlying trends in consumption remain hostage to Covid-19-linked pressures and suggest the economic recovery will take time to gather steam. With Tokyo set to host the Olympic Games next month, analysts expect Japan’s economy will barely grow in the second quarter after prolonged coronavirus emergency curbs hurt the growth outlook.
Retail sales jumped 8.2 per cent in May from a year earlier, the third straight month of growth, government data showed on Tuesday a larger rise than the median market forecast for a 7.9 per cent gain. Despite the better-than-expected rise in retail sales, the jump was not strong enough to mark a definite shift towards a brighter outlook for spending conditions, said Takeshi Minami, Chief Economist at Norinchukin Research Institute.
“Many elderly were unlikely to go out and spend money in April and May as there was still a state of emergency or quasi-emergency measures (in major areas),” said Minami. “It’s hard to imagine that the Olympics will set off a spending rush,” he said, adding that risks remained that another resurgence in Covid-19 infections would weigh on consumption ahead.
