Japan's household spending unexpectedly falls as firms cut bonuses

MACROECONOMICS - TOKYO. Japan's household spending unexpectedly fell in June and summer bonuses declined, data showed on Friday, adding gloom to an economy already struggling with the hit to consumption from a resurgence in coronavirus infections.

The figures underscore the challenge policymakers face as they seek to support a fragile economic recovery, while battling a spike in Delta variant cases that has forced Japan to expand state of emergency curbs during the Olympic Games.

Household spending fell 5.1% in June from a year earlier, government data showed, confounding market forecasts for a 0.1% gain and marking the first drop in four months.

Compared with May, household spending fell 3.2%, reinforcing the need for export-driven growth as domestic demand remains weak.

Separate data showed Japanese wage earners' total cash earnings fell 0.1% in June from a year earlier, marking the first annual decline in four months.

Special payments in June, which mostly account for summer bonus payments, were down 2.3% from the previous year, the data showed.

Japan's economy has emerged from the doldrums as solid exports offset weak domestic demand, though growth lags other advanced nations as slow vaccinations weigh on consumption.

The country has expanded curbs lasting through August to deal with a spike in infections, dashing policymakers' hopes for a strong rebound in July-September economic growth.