published Jun 28th 2016, 7:07 pm, by Keiko Ujikane

(Bloomberg) —
Japan’s retail sales were unchanged in May, underscoring the challenge Prime Minister Shinzo Abe faces in boosting consumer spending and reviving the economy.

Sales were flat in May from the previous month, when they dropped, the trade ministry reported Wednesday. The median forecast of economists surveyed by Bloomberg was for no gain. From a year earlier, sales fell 1.9 percent, compared with a forecast decline of 1.6 percent in the survey.

The report signals continued weakness in private consumption, exacerbating the risks for an economy that is struggling with a slowdown in exports and business investment. Sentiment among consumers and companies may weaken after Britain’s vote last week to leave the European Union roiled global financial markets, strengthening the yen and pushing down stocks.

“Consumers aren’t loosening their purse strings, despite a gradual improvement in real income,” Azusa Kato, an economist at BNP Paribas SA in Tokyo, said before the report was released. “Consumer sentiment remains weak as there are uncertainties over the economic outlook.”

The Topix index has dropped almost 10 percent this month, plunging on June 24 with the Brexit vote, the most since the aftermath of the 2011 earthquake. The yen has strengthened more than 8 percent against the dollar this month.

–With assistance from Tomoko Sato. To contact the reporter on this story: Keiko Ujikane in Tokyo at kujikane@bloomberg.net To contact the editors responsible for this story: Brett Miller at bmiller30@bloomberg.net Jodi Schneider, James Mayger

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