By Kantaro Komiya

TOKYO, Reuters – Japan’s September household spending declined as people remained concerned about COVID-19. This reinforces the view that Japan is the world’s third largest economy.

These data showed that policymakers must support domestic consumption in the face of a global supply crunch.

After a 3.0% drop in August spending, September saw a 1.9% decrease in spending, according to Friday’s government data. The reading was higher than the 3.9% slide in a Reuters poll median market forecast.

Seasonally adjusted, September’s spending rose by 5.0%, which was more than the 2.8% expected.

Many economists anticipate a decrease in Japan’s third quarter output. It is due, in part, to disappointing industrial output figures which have been falling on cuts in automobile production.

Supply shortages of semiconductors, and other components made in Southeast Asia by coronavirus-dead Southeast Asia, have had a significant impact on other areas of Japan’s economy. Due to slumps in car sales, export growth has been slow while private consumption has stagnated.

On Nov. 15, the government will release its preliminary Gross Domestic Product Estimate for July-September.

Fumiokishida, Japan’s prime minister, promised earlier in the week that he would compile an “important-scale” package of stimulus packages to support Japan’s slow recovery.