TOKYO (Reuters) - Japan’s retail sales grew the fastest in 10 months in October as consumers shelled out more on fuel, cars, medicines and cosmetics, in a sign firm private consumption is likely to put the economy back on track for growth.
The 3.5 percent annual gain in retail sales in October from a year earlier handily beat the median estimate for a 2.6 percent increase and follows a revised 2.2 percent rise in September.
It was the fastest annual gain since last December.
Retail sales are a key barometer for the strength of private consumption, which accounts for roughly 60 percent of the Japanese economy. The data confirmed they have risen for a full straight year, reflecting a tight labor market and gradual wage growth.
Policymakers are counting on a rise in private consumption to help accelerate inflation to the central bank’s 2 percent target, as core consumer prices have risen just at half the price target despite more than five years of its massive monetary stimulus.
On a seasonally-adjusted basis, retail sales grew 1.2 percent in October versus a revised 0.1 percent gain in the previous month, data from the Ministry of Economy, Trade and Industry showed on Thursday.
It marked a fifth straight month of monthly gains, and was the biggest increase since June.
Japan’s economy, the world’s third largest, shrank more than expected in the third quarter, hit by natural disasters and sluggish exports.
But a flurry of data due this week, including factory output and jobless figures, is expected to reinforce consensus views that the contraction was temporary.
The economy is widely expected to return to growth in the current quarter, though the strength of that rebound is still up for debate. Slowing global demand and the intensifying U.S.-China trade war are clouding the outlook for export-reliant Japan.
Japanese manufacturing activity expanded at the slowest pace in two years in November and new orders contracted for the first time since September 2016, a preliminary survey showed on Monday.
Reporting by Tetsushi Kajimoto; Editing by Kim Coghill