Japan shoppers open wallets, raising hopes for sustained revival

Japan’s cautious consumers are starting to loosen up, spending more on cars and home appliances and offering hope that domestic demand – and not just exports – will be strong enough to reflate an economy that has been sluggish for many years.The tightest labour market since the 1970s seems to be a playing a role.Temporary and part-time workers are getting paid more to help fill shifts, and that is helping lift sales.Consumption was the main driver behind Japan’s second-quarter economic growth, which expanded at an annualised 4%, gross domestic product data released yesterday showed, the strongest in more than two years and much higher than the growth achieved by the United States and the European Union.“I ended a big project today, and I wanted to give a present to my girlfriend who has always been supportive, so I bought her a Tiffany necklace,” said Yusuke Kawashima, a 29-year-old freelance software programmer in Tokyo.“Quite a few of my friends have said they either had a pay raise or received a large bonus, so I think they’ll be spending as well.” Wage hikes for part-time workers in Japan have accelerated, rising to 2.3% year-on-year in May from 0.7% in August 2016.Salaries for full-time workers, though, have been little changed.Susumu Ikeda, 70, says shoppers are buying more at his musical instrument shop in Tokyo’s tony Ginza shopping district, and senses the economy is taking a turn for the better.“Some may be cynical about our growth, but compared to our worst we are getting much better,” he said.Furniture maker Nitori Holdings Ltd, convenience store leader Seven & i Holdings Co and coffee shop chain Doutor Nichires Holdings all reported rising domestic sales in their recent earnings reports.Sales of new cars accelerated in April-June from the previous quarter, and GDP data showed higher purchases of appliances, such as air conditioners.Private consumption – which accounts for almost 60% of GDP – rose in the second quarter at the fastest pace in more than three years, offering the most definitive sign yet that consumers have shaken off the impact of a sales tax hike in 2014.For some, like 31-year-old Tokyo office worker Natsuki Abe, the economy just feels healthier. “I do think the economy is doing better than it was before, but it’s just a feeling,” she said. “My company is doing well, and I think I do have the money to spend on things that I like and want. I mainly spend on clothes, as I want to look good.”There have been previous such advances that have turned out to be temporary during Japan’s many years of economic weakness since the early 1990s, with consumer spending often a culprit as it loses momentum.This time may be different, though, some economists argue.That is because the unemployment rate is now low enough – 2.8% – to lift wages.