Japan Week Ahead: MOF Business Survey to Set the Tone for Revised Q1 GDP, Household Data to Show Sluggish but Resilient Consumer Spending Amid Slow Real Wage Growth

By Max Sato

(MaceNews) – Here are the key Japanese events for the coming week.

Lukewarm growth has been lingering in Japan for the past couple of years as the economy has largely weathered the drag from global shocks like Russia’s invasion of Ukraine and protectionist U.S. trade policy but it could finally slip on the bumps created by the Mideast conflict.

Consumers remain cautious about spending as geopolitical risks have boosted global costs for energy and commodities and Japan’s import costs have been pushed up by the stubbornly weak value of the yen. Their spending patterns have shown some resilience, backed by plans among large companies to continue raising wages to secure quailed workers, although wage growth for those at smaller firms that employ 70% of the workforce is falling behind inflation.

Recent polls point to sliding support for the economic and other policies under Prime Minister Sanae Takaichi. Many voters are being frustrated by elevated costs for necessities and living in fears of a supply breakdown amid the Iran war, with skepticism emerging over the official line that the country has sufficient crude oil reserves as well as supply of naphtha and other key materials for running the economy. 

Monday, June 1
0850 JST (2350 GMT/1950 EDT Sunday, May 31) The Ministry of Finance releases the Q1 Financial Statements Statistics of Corporations by Industry, key to calculating revisions to January-March GDP due June 8. Economists will look at capital investment and inventories in the demand-side survey to forecast the revised GDP. Capex figures in the preliminary Q1 GDP data released on May 19 were solely based on the supply side.

The quarterly business survey is expected to show a fifth straight year-on-year increase in business investment in equipment and software but its pace may slow down from 6.5% in Q4 in the face of a spike in crude oil prices and concerns over an energy and commodities supply disruption.

The economy grew a preliminary 0.5% on quarter, or an annualized 1.7%, in the January-March quarter, accelerating from a slight 0.2% rebound in the last three months of 2025 on the 0.6% contraction in July-September, the first drop in six quarters. The Q1 GDP growth was driven by rebounds in both net exports and public works as well as sluggish but resilient private consumption and a modest gain in business investment in equipment and software amid the artificial intelligence boom.

Capital investment rose 0.3% on quarter, as expected, marking the second straight increase and adding 0.1 percentage point to total domestic output after rising 1.4% in October-December and slipping 0.1% previously. The contribution of private inventories recorded the fourth consecutive drop, down 0.1 percentage point, after trimming the Q4 GDP by 0.4 point.

Looking ahead, some economists expect the economy to shrink slightly in the April-June quarter (data due Aug. 17) as the Iran war that broke out in late February has already triggered a spike in energy prices and caused shortages of petrochemical products and building materials. Factory production is constrained, construction is being delayed and retailers are being forced to raise prices.

Wednesday, June 3
1730 JST (0830 GMT/0430 EDT Wednesday, June 3) Bank of Japan Governor Kazuo Ueda speaks to a business audience at an event hosted by Kyodo News ahead of the bank’s policy meeting on June 15-16. At its last meeting on April 27-28, the nine-member board decided in a 6 to 3 vote to leave the target for the overnight interest at 0.75%. The bank left it unchanged in an 8 to 1 vote at its previous meetings in March and January and conducted its first rate hike in six meetings in December 2025 by raising it by 25 basis points (0.25 percentage point) to a 30-year high in a unanimous vote.

Ueda told a post-meeting news conference on why the board stood pat in April: “To put it simply, the fundamental reason is that the certainty of our core outlook has diminished. Behind this, we must remain vigilant regarding the risk of inflation exceeding expectations and the risk of an economic downturn.”

Asked how long the bank would continue assessing risks before taking action, the governor replied, “We don’t prejudge (before going into the meeting). We will continue reviewing the probability of our outlook and the nature of risks at the next meetings onwards and make appropriate decisions.”

Ueda pointed to the common challenge for major central banks: Both downside risks to growth and upside risks to inflation are getting bigger, making it harder for policymakers to judge how they will evolve. He also said he needs a little more time to have a clearer picture of how the Mideast conflict will affect Japan’s wobbly recovery.

Friday, June 5
0830 JST 0830 JST (2330 GMT/1930 EDT Thursday, June 4) The Ministry of Internal Affairs and Communications releases April household spending.
Mace News median forecasts: -1.6% y/y (range: -2.7% to -0.3%) vs. Mar -2.9%; +0.4% m/m (range: -0.5% to +2.0%) vs. Mar -1.3%

Japan’s real average household spending is expected to show a continued sluggish tone, marking a fifth straight year-on-year decline, down 1.6% in April, after a 2.9% slump in March amid falling real wages for many workers. The March decline was exaggerated by a volatile category of vehicles and related items, which pushed down overall spending by 2.82 percentage points. Excluding home maintenance and repairs and other volatile items like vehicles and gift money, the core measure fell by a smaller 1.3% (up 0.3% in nominal terms) after falling 2.3% in the prior month.

Overall, consumers have been cautious about spending beyond necessities amid slow recovery in real wages, trimming expenditures on eating out and gift money at weddings while they have shelled out higher dental bills in recent months. There is also a widespread move to switch to more affordable mobile communications plans.

The supply side data released last week showed retail sales posted a solid 2.1% rise on year in April, propped up by continued demand for clothing and luxury goods at department stores, the recent pickup in vehicle purchases, and strong drugs/cosmetics sales, offsetting the effects of falling fuel prices caused by subsides aimed at alleviating the drag from the Mideast conflict.

Department store sales recorded their fourth straight year-on-year increase in April, up 5.2%, after rising 3.2% in March, led by solid demand for spring clothing and high-end watches and jewelries. Sales to visitors from overseas marked their second straight year-on-year gain as the yen remained weak, pushing up their purchasing power. Some Chinese tourists continued boycotting Japan over bilateral diplomatic rows but the pace of decline in sales to customers from China eased to about 2% in April from 20% previously while spending by visitors from Taiwan, South Korea and Southeast Asia more than offset the decrease.

On the month, real average expenditures by households with two or more people are forecast to edge up 0.4% after slumping 1.3% in March, rising 1.5% in February and plunging 2.5% in January.

Friday, June 5
0830 JST (2330 GMT/1930 EDT Thursday, June 3) Ministry of Health, Labour and Welfare releases preliminary April wages.

Total monthly average cash earnings per regular employee in Japan have been above year-earlier levels for more than four years, up 3.1% in March, after a 2.7% gain in February. The increase was led by solid base wage and overtime growth, which offset a slight drop in special pay.

In real terms, however, average wages rose at a much slower pace of 1.4% in March. It was a fourth straight increase following 12 months of decline but real wages for many workers still remain below year-earlier levels as inflation and price levels for necessities remain elevated.

Friday, June 5
1400 JST (0500 GMT/0100 EDT Friday, June 5) The Bank of Japan releases the April consumption activity index.

The supply-side indicator, which has a close correlation with revised GDP data, fell a real 0.2% on the month in March on a travel balance adjusted basis, after slipping at the same rate for the first drop in four months in February and rising 0.5% in January. It rose 0.3% on quarter in January-March following a nearly flat reading (-0.0%) in the last three months of 2025. Adjusted figures exclude inbound tourism spending and include outbound tourism spending.