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3 Minutes to Read (Adds details, economic context) * May household spending increased by 11.6 percent year over year, compared to 10.9 percent forecast. * In May, household spending fell 2.1 percent m/m, compared to a forecast of -3.7 percent. * After a 13.0% year-over-year increase in April, spending growth has slowed. Reuters, TOKYO, July 6 – Consumer spending in Japan increased by double digits in May as people bought automobiles and cellphones, while the rate of rise slowed from the previous month as a new wave of COVID-19 infections weighed on consumer confidence. After the government implemented “quasi-emergency” measures in Tokyo and other major cities to prevent a resurgence of illnesses, Japan’s economy is still battling to recover. Household spending increased by 11.6 percent year over year in May, following a 13.0 percent increase in April, according to official figures released on Tuesday. In a Reuters poll, the median market prediction was for a 10.9 percent increase. The increases, however, were disproportionately skewed by the rebound effect from last year’s plunge, when the pandemic and a statewide state of emergency forced firms to close and disrupted daily life. The statistics showed a 2.1 percent drop month over month, compared to a prediction of a 3.7 percent drop. The increase in spending in May is unlikely to allay concerns that Japan is falling behind other major economies, such as the United States, which is expected to grow at a rate of 7.0 percent this year, the fastest in a generation, according to the International Monetary Fund. Consumer and company confidence has been harmed by the threat of another outbreak of diseases, as well as a late vaccination effort across the country. Separate statistics released on Tuesday showed that inflation-adjusted real salaries rose the most in May since June 2018, owing in part to an increase in overtime pay. Some economists believe Japan’s economy will enter a second quarter recession, defined as two consecutive quarters of loss, as consumer and business confidence is harmed by steps to combat an increase in coronavirus infections. According to a private company survey released on Monday, Japan’s services sector activity contracted for the 17th consecutive month in June. Daniel Leussink contributed reporting, and Kim Coghill edited the piece./nRead More

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