Japan's household spending rebounds but recession looms

Spending among Japanese households rebounded in August, data showed Friday, offering a glimmer of hope after a string of weak figures, but economists warned the world's number three economy was still headed for recession.

Consumers spent more on cars, household repairs, domestic travel and education costs, boosting monthly spending by 2.9 percent, well above market expectations for a 0.3 percent rise and following a modest decline in July.

The upbeat figures were a rare bright spot in an otherwise gloomy string of trade, factory output and business confidence data that point to a contraction in the third quarter, ahead of the release of July-September GDP figures due next month.

While private spending accounts for about 60 percent of Japan's GDP, analysts have warned over a recession in the July-September quarter -- after a contraction in the previous three months.

The slowdown in Japan's economy has underlined the challenges facing Prime Minister Shinzo Abe's growth blitz, dubbed Abenomics, as speculation grows that the Bank of Japan (BoJ) would have to expand its massive asset-buying plan as early as this month.

"The renewed rise in... household spending in August suggests that private consumption rebounded last quarter," Marcel Thieliant from Capital Economics said in a commentary.