Household Spending in Japan Soars at Fastest Pace in 9 Years.

TOKYO (Reuters) — Japan’s household spending surged in March at the fastest pace in nine years in a sign that Prime Minister Shinzo Abe’s bold efforts to end two decades of stagnation are lifting consumer confidence and setting the stage for an economic revival.

Household spending soared 5.2 percent in March from a year earlier in price-adjusted terms, the Ministry of Internal Affairs and Communications said on Tuesday, as some individual investors cashed in on stock gains to increase spending on cars and home repairs.

The figure far exceeded the median estimate for a 1.8 percent annual increase and was the fastest gain since a 5.3 percent rise in the year to February 2004.

Such a big increase in spending is unlikely to be sustained, and some worry that wages have been slow to improve. Still, analysts said they expect consumer spending to continue to expand at a more reasonable pace as investors cash in on stock market gains.

A recent run of data has provided encouraging early hope that Mr. Abe’s push for aggressive fiscal and monetary policies can get the country’s economy, the world’s third-largest, moving again.

Household spending is crucial to reigniting growth, and in this respect the data should come as a relief to Haruhiko Kuroda, governor of the Bank of Japan, who hopes to see the economy generate 2 percent inflation in roughly two years.

On the whole, the figures suggest that expectations for Mr. Abe’s combination of fiscal spending, monetary stimulus and structural change, known as Abenomics, are having a positive impact on Japanese households, though the corporate sector is lagging.

“I expect first-quarter gross domestic product growth to exceed an annualized 2 percent, and if the corporate sector catches up with households, the pace of growth could accelerate,” said Yoshiki Shinke, senior economist at the Dai-Ichi Life Research Institute.

Mr. Abe’s policy mix has driven the yen to a four-year low against the dollar and led to a 50 percent rally in Japanese share prices from last November, which has helped buoy consumer sentiment.

Article source: http://www.nytimes.com/2013/05/01/business/global/household-spending-in-japan-soars-at-fastest-pace-in-9-years.html?partner=rss&emc=rss