Japan sales slump for third month

By CNN's Alex Frew McMillan and wire reports

TOKYO, Japan -- Japan's retail sales fell 2.7 percent for June, over a year ago. That marks the third straight down month, new data showed Thursday.

The sales slump is further evidence of Japan's economic slide, ahead of Sunday's Upper House elections in Japan.

A dip in the country's stock market and Japan's apparently endless economic slide have started to cut into Prime Minister Junichiro Koizumi's record popularity.

The Nikkei closed at a 16-year low on Monday

The latest polls show the Koizumi cabinet's approval rating stands at 69 percent, down from a record 85 percent earlier this year.

Consumers not flashing the cash

Nationwide retail sales hit $85 billion (10.53 trillion yen) in June.

Thursday's figures from the Ministry of Economy, Trade and Industry show that Japanese consumers are crimping their buying, with government officials admitting Japan is likely experiencing recession.

Big-store sales fell for the 38th month in a row, dropping 1.9 percent year-on-year, to $14.4 billion (1.78 trillion yen).

A summer heat wave in Japan boosted sales of some products, such as beer and soft drinks. June is also the month when bonuses get paid in Japan.

Consumers have not cut back their spending as much as companies in Japan. But analysts had hoped for stronger June numbers thanks to those seasonal factors.

The high temperatures, almost zero-rate interest rates and the extra bonus cash still didn't offset the dip caused by Japan's persistent slide.

Sales aren't likely to get better anytime soon.

Koizumi has warned he plans reforms that will mean pain for Japan, in the form of higher unemployment and bankruptcies.

But international investors have become increasingly suspicious that reforms aren't going anywhere under the maverick prime minister.

On Wednesday, the policy chiefs of Koizumi's coalition put off plans to boost the stock market by cutting taxes to encourage investing.

They said they wanted to wait until after Sunday's vote, where Koizumi's ruling Liberal Democratic Party is still expected to coast to victory.