Japan Retail Sales Slump On Deterioration In Economic Conditions - Dec 26, 2008

The retail sales in Japan have slumped sharply, in line with the overall deterioration in the economic conditions in the country. Japanese retail sales fell an annual 0.9% in November, above expectations for a 1.3% contraction and further than the 0.7% decline reported in October.Recently, the Bank Of Japan stated that the domestic exports have decreased.

Corporate profits have continued to decrease, and business sentiment has also deteriorated. In this situation, business fixed investment has declined. Private consumption has weakened, as the employment and income situation has become increasingly severe.

According to figures from the Ministry of Economy, Trade and Industry on Friday morning (Thursday night EDT), on a monthly, seasonally adjusted basis, sales fell 0.1% in November, despite forecasts for a 0.8% decrease and following October's 0.7% decline.The report also said sales by large retailers decreased 3.2% on the year, despite expectations for a 4.6% decrease and the previous month's 4.3% contraction.

Japan's economic conditions are likely to increase in severity for the immediate future. Exports are expected to decrease substantially due to the further slowdown in overseas economies and the appreciation of the yen. This should keep the retail sales stressed in the near term.

The BOJ has already noted “Domestic private demand is also likely to weaken further as corporate profits and firms' funding conditions deteriorate and the employment and income situation becomes increasingly severe”