[Japan] Real consumption expenditure in July 2025 shows a slowdown but remains in positive territory; while the consumption trend is solid, there is a possibility of a weakening outlook | A clear explanation of important economic indicators of Japan and America | Moneyクリ Money's investment information and media useful for finances

Announcement on August 8, 2025 (Friday) at 14:00

Japan Economy Watchers Survey July 2025

(Others: From the latest family budget survey, commercial activity statistics quick report, consumer trend survey, and consumer activity index)

【1】Results: Consumption trends appear resilient, but overall they are mixed.

[Figure 1] Recent Consumption-Related Statistics *Items without a supplementary are exponential values, and those in parentheses are year-over-year % comparisons. Source: Created by Monex Securities from the Ministry of Internal Affairs and Communications, Cabinet Office, Bank of Japan, and Ministry of Economy, Trade and Industry. In the household survey of June 2025, the real consumption expenditure of households with two or more workers increased by 3.8% compared to the same month of the previous year, reaching 323,000 yen, marking a positive change for four consecutive months compared to the same period last year. Real income saw a decrease of 1.7% to 976,000 yen, the first decline in three months, attributed to stagnant income growth from bonuses, similar to the monthly labor statistics survey for June released on the 6th. As a result, disposable income (income after deducting taxes and social insurance premiums, commonly known as take-home pay) decreased by 8.1% compared to the same month last year, indicating a slowdown compared to 2024 (Figure 2).

Looking at other consumption indicators, retail sales have been maintained at a standstill according to the Ministry of Economy, Trade and Industry, with mixed conditions across industries. While there is a noticeable downward trend in department stores, supermarkets and the like have shown stable sales. Consumer sentiment has remained flat, and while no significant improvement was observed, the outlook for household trends in the Economy Watchers Survey indicated potential for improvement.

[Figure 2] Trends in Income and Consumption of Households with Two or More Employed Persons (Year-on-Year Comparison, %) Source: Created by Monex Securities from the Ministry of Internal Affairs and Communications, all three indicators are on a real basis.

【2】Content and Highlights: The private final consumption of GDP in the previous quarter was at best flat.

[Table 3] Trends in Household Consumption Trend Index and Consumption Activity Index Source: Created by Monex Securities from the Bank of Japan and the Ministry of Internal Affairs and Communications. *CTI Micro is for households of two or more people. The Household Consumption Trend Index, also known as CTI Micro, is an index that represents the "average consumption expenditure amount per household." In June, the seasonally adjusted CTI Micro for households of two or more people decreased by 3.0% compared to the previous month, confirming a decline due to the rebound from a significant increase in May (Figure 3, in blue).

On the other hand, although the consumer activity index calculated by the Bank of Japan shows signs of recovery for June, it can be considered as remaining flat when viewed over the previous quarter. From this, personal consumption in the GDP for the previous quarter (April - June 2025) is expected to be flat, with a quarter-on-quarter change of around 0%.

【3】Impressions: For future consumption to gain further strength, an increase in base salary is important.

While there are some signs of weakness in consumption at the moment, it is considered to be steadily transitioning. On the other hand, as shown in Chart 2, there is evidence of concerns for the future, such as a significant decline in real disposable income. It is expected that the domestic economy will face downward pressure on GDP due to a decrease in exports resulting from the U.S. tariff policy, but there is a perspective that consumption will support this, indicating that personal consumption is becoming increasingly important.

However, in cases where households are aware of a decline in income, this scenario may falter. Since bonuses are temporary factors, it is considered important whether the base salary steadily rises.

Monex Securities Financial Intelligence Department Keita Yamaguchi