2 May 2014
Japan: Fallback in demand post tax hike not as severe as in 1997 - Nomura
FXStreet (Bali) - Nomura Economists are observing that the current fallback in Japan's sales looks a little smaller than following previous consumption tax hike in 1997, an encouraging sign for the BoJ.
Key Quotes
"Four major Japanese department store operators have released sales data for April 2014. This is the first consumer spending-related data to be published since the 1 April consumption tax hike, making it important for gauging the extent of the fallback after rush demand."
"April 2014 sales were down y-y by an average of 11.1%, a sharp fallback from the 29.4% average growth in March, when there was rush demand ahead of the tax hike. Using this data, we calculate all-Japan department stores falling 7.2% y-y and 26.1% m-m in April."
"If this figure is accurate, it represents a slightly smaller fallback in demand than seen in April 1997, the last time the rate was hiked. Sales were up 25.5% y-y in March 1997 on rush demand, followed by a fallback in April with sales down 12.3%, versus 2014 figures of sales up 25.2% in March and sales down 7.2% in April (estimated)."
"As such, rush demand was broadly similar, but the fallback appears to have been a little more muted."
Data consistent with our view that consumer spending will not buckle even with higher consumption tax These results are consistent with our view to date.
"Weekly statistics and other data show that the fallback in demand for electronics is broadly on a par with last time around. Based on currently available spending-related statistics, we think the fallback in demand following the consumption tax hike is not as severe as in 1997."
Key Quotes
"Four major Japanese department store operators have released sales data for April 2014. This is the first consumer spending-related data to be published since the 1 April consumption tax hike, making it important for gauging the extent of the fallback after rush demand."
"April 2014 sales were down y-y by an average of 11.1%, a sharp fallback from the 29.4% average growth in March, when there was rush demand ahead of the tax hike. Using this data, we calculate all-Japan department stores falling 7.2% y-y and 26.1% m-m in April."
"If this figure is accurate, it represents a slightly smaller fallback in demand than seen in April 1997, the last time the rate was hiked. Sales were up 25.5% y-y in March 1997 on rush demand, followed by a fallback in April with sales down 12.3%, versus 2014 figures of sales up 25.2% in March and sales down 7.2% in April (estimated)."
"As such, rush demand was broadly similar, but the fallback appears to have been a little more muted."
Data consistent with our view that consumer spending will not buckle even with higher consumption tax These results are consistent with our view to date.
"Weekly statistics and other data show that the fallback in demand for electronics is broadly on a par with last time around. Based on currently available spending-related statistics, we think the fallback in demand following the consumption tax hike is not as severe as in 1997."