TOKYO (Reuters) - Japan’s household spending likely rose for a fourth straight month in March, a Reuters poll found on Friday, but weak factory output and exports could still push the economy into a mild contraction in the first quarter.
Household spending is expected to have risen 1.7 percent in March from a year earlier, the poll of 14 economists showed, the same rate of growth posted in February.
“The employment situation is favorable but wage recovery remains moderate, which is why private consumption lacks momentum,” said Takeshi Minami, chief economist at Norinchukin Research Institute.
“Still, domestic demand will likely be relatively solid till a planned sales tax hike in October. But after that, the economy is seen weakening unless external demand becomes strong enough to boost Japan’s economy.”
Japan is scheduled to raise its sales tax hike to 10 percent from 8 percent in October, after Prime Minister Shinzo Abe twice postponed it.
The last sales tax increases from 5 percent in 2014 dealt a blow to private consumption, which accounts for about 60 percent of the economy.
The government will announce household spending data at 8:30 a.m. Japan time on Friday, May 10 (2330 GMT, May 9).
Recent data showed Japan’s industrial output fell in January-March at the fastest pace in almost five years, while exports fell for a fourth straight month.[nL3N2272AR][nL3N21T1SQ]
Reporting by Kaori Kaneko; Editing by Kim Coghill