Japan 2004 salaried household spending up 1,5%, first rise in 7 years

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TOKYO (AFX) - Salaried household spending in 2004 rose by a real 1.5 pct from a year earlier, the first increase in the past seven years, a sign of recovery in Japan's economy which suffered a decade-long slump

Overall income of salaried worker-headed households also marked the first rise in seven years, up by a real 1.0 pct from the previous year, the the Ministry of Internal Affairs and Communications said

A ministry official said the rise in household spending reflects growth in income in the first half of 2004

The propensity to spend rose to 74.4 pct in 2004 from 74.0 pct in 2003, with dispensable income rising by a real 1. 0 pct, also the first rise in the past seven years. Spending on durable goods rose 3.8 pct, helping boost overall spending by 0.12 percentage point in 2004. Within durable goods, spending on TV climbed 34.5 pct, contributing 0.07 percentage point to the overall spending increase, while spending on personal computers jumped 32.7 pct, contributing 0.13 percentage point to total spending growth

"Price cuts in these appliances likely have led to a large amount of purchases," the ministry official said. Spending on vehicles and related goods rose 6.0 pct, contributing 0.83 percentage point to the rise in overall spending

Spending on education in 2004 jumped 8.6 pct, helping bolster total spending by 0.48 percentage point. "Fare rises in private universities and spending on cram schools apparently contributed to the increase," the official said. For December, salaried household spending fell by a real 3.8 pct year-on-year, the fourth decline in seven months, well below expectations

Spending was expected to rise 0.5 pct, the average of 21 forecasts in a Nihon Keizai Shimbun poll of brokerages and research houses. The forecasts ranged from a decline of 0.9 pct to a rise of 3.3 pct

Spending by salaried-worker headed households, which accounts for about 60 pct of total household spending in Japan, averaged 369,470 yen last month

In November, spending by salaried-worker-headed households fell 0.7 pct from a year earlier

Overall income of salaried worker-headed households fell 2.6 pct year-on-year in December. Incomes of household heads increased 0.3 pct but disposable income declined 3.7 pct, the ministry said

The propensity to spend rose to 76.4 pct from 71.5 pct the previous month, the ministry said

Spending on food dropped 3.0 pct from a year earlier, slashing overall spending by 0.66 percentage point. That followed a 4.7 pct decline in November. "The decline reflects higher prices of fresh vegetables and sea weeds due to long rains and many typhoons last year," said the ministry official

Spending on housing dropped 18.5 pct year-on-year, following a 20.0 pct jump in November, cutting overall spending by 1.37 percentage points

On the other hand, spending on vehicles and related goods rose 4.3 pct year-on-year, lifting total spending by 0.5 percentage point