Japan Retail Sales Fall for Eighth Month on Job Woes

May 28 (Bloomberg) -- Japan’s retail sales fell for an eighth month in April as worsening job prospects and declining wages deterred shoppers.

Sales slid 2.9 percent from a year earlier after decreasing a revised 3.8 percent in March, the Trade Ministry said today in Tokyo. Economists surveyed by Bloomberg News predicted a 3.3 percent drop.

The worst postwar recession is spreading to households, whose outlays account for more than half of the economy. Japan may struggle to return to a sustainable growth path as long as companies from Toyota Motor Corp. to Panasonic Corp. keep cutting jobs to minimize losses.

“Consumer spending is too weak to support a recovery, given the deterioration in the job market,” said Kyohei Morita, chief economist at Barclays Capital in Tokyo. “Japan’s economy will remain fragile in the absence of stronger domestic demand.”

The yen traded at 95.79 per dollar as of 9:37 a.m. in Tokyo from 95.63 before the report. The Nikkei 225 Stock Average fell 0.1 percent.

Sales at large retailers tumbled 6.7 percent as operators of department stores and supermarkets discounted to attract customers, said Shinichiro Kobayashi, director of statistics at the Trade Ministry.

Isetan Mitsukoshi

Isetan Mitsukoshi Holdings, Japan’s biggest department store operator, forecasts a 90 percent decline in profit this fiscal year.

From a month earlier, sales climbed 0.6 percent, the first gain in eight months, as the government began distributing 12,000 yen ($125 to each resident as part of its efforts to stimulate the world’s second-largest economy. Taro Aso’s administration has also slashed highway tolls and on May 15 started to offer incentives for purchasers of environment- friendly televisions, refrigerators and air-conditioners.

The unemployment rate surged 0.4 percentage point to 4.8 percent in March, the biggest increase since 1967, and analysts expect a report this week will show it rose to a five-year high of 5 percent in April. Nikon Corp., the world’s second-biggest maker of cameras used by hobbyists and professionals, will eliminate 1,000 jobs, the company said this week.

The Bank of Japan and the government raised their assessments of the economy for the first time since 2006 this week on signs that exports and production are starting to stabilize. Both pointed to weakness in consumer spending and rising unemployment as risks to a recovery.

Lower Bonuses

Workers at the country’s biggest businesses will have their mid-year bonuses cut by a record 19.4 percent, according to a survey published last week by the Keidanren business group.

Still, consumer confidence rose to a 10-month high in April on optimism that the worst of the recession is over. The $25 trillion yen in stimulus spending and the Nikkei’s 33 percent rebound from a 26-year low in March may also be helping sentiment.

“The mist of uncertainty over Japanese private consumption is thick,” said Masayuki Kichikawa, chief Japan economist at Merrill Lynch & Co. in Tokyo. “It will be tug of war between fiscal stimulus and the deteriorating labor market.”