3 Minutes to Read by 3 Minutes to Read by 3 Minutes to Read by 3 TOKYO, Japan (Reuters) – In May, Japanese retail sales exceeded estimates as people eased their purse strings, but underlying consumption trends remain hampered by COVID-19-related factors, implying that the economic recovery would take time to gain traction. Showcase ( 2 images ) After lengthy coronavirus emergency curbs damaged the economic prospects, analysts estimate Japan’s economy will barely grow in the second quarter as it prepares to host the Olympic Games next month. The sluggish growth rate in Japan is pressing policymakers to take more supporting measures on top of the large existing stimulus to promote demand, as big global economies such as the United States return quickly from the COVID-19 collapse. Retail sales increased 8.2 percent in May compared to the same month a year ago, according to official data released on Tuesday. This was higher than the median market projection of 7.9 percent growth. Despite a stronger-than-expected increase in retail sales, Takeshi Minami, chief economist at Norinchukin Research Institute, said the increase was not significant enough to signal a clear move toward a more optimistic outlook for spending conditions. “Many senior people were unlikely to go out and spend money in April and May since there were still emergency or quasi-emergency measures in place (in major areas),” Minami explained. “It’s difficult to believe that the Olympics will spark a shopping frenzy,” he said, adding that there was still a chance that COVID-19 infections will resurface, putting a damper on consumption. The data revealed that year-on-year increases in spending on products like general merchandise, apparel, vehicles, and fuel supported the broader improvement in retail sales, which was mostly due to statistical base effects that reflected last year’s fall. However, on a seasonally adjusted basis, retail sales fell 0.4 percent from the previous month, indicating that the Japanese consumer spending trend was fading. Separate statistics revealed that the seasonally adjusted unemployment rate in the United States increased to 3.0%, up from 2.8 percent the previous month and above the median prediction of 2.9 percent. According to labor ministry figures, there were 1.09 jobs per applicant in May, which was unchanged from April. According to the most recent Reuters poll data, the world’s third-largest economy is expected to grow by an annualised 0.5 percent in the current quarter, following a steep 3.9 percent annualised drop in January-March. Yoshifumi Takemoto, Daniel Leussink, and Kentaro Sugiyama contributed reporting. Continue reading