Japan economy watchers’ sentiment up for first time in three months

Sentiment among so-called economy watchers in Japan, or people working in industries sensitive to economic swings, improved for the first time in three months in March, a government survey showed Friday.

The seasonally adjusted index on economy watchers’ sentiment about current economic conditions soared 10.1 points from the previous month to 47.8, reflecting the full lifting of the government’s COVID-19 pre-emergency measures March 21.

Based on the survey, conducted from March 25 to 31, the Cabinet Office revised up its basic assessment, citing signs of recovery. In the February survey, it pointed to some weakness in the pickup of the economy.

In March, the current sentiment index improved 13.1 points for household activities, 7.4 points for employment and 2.4 points for corporate activities.

The index improved in all surveyed regions. The best performer was Hokkaido, which saw an improvement of 16.8 points.

The index on economy watchers’ outlook for the economy two to three months ahead grew 5.7 points. But concerns are growing over soaring energy prices, worsened by Russia’s invasion of Ukraine.

“Consumers will be even more budget-minded following a series of prices hikes for electricity, gasoline and others,” an employee of a supermarket in central Japan was quoted as saying in the latest survey.

Backing up that sentiment, a government survey showed Japanese consumer sentiment dropped for the third straight month in March, dampened by higher prices exacerbated by the war in Ukraine.

The seasonally adjusted consumer confidence index fell by 2.4 points from the preceding month to 32.8, logging the fourth-biggest decline under the current survey format, which began in April 2014, the Cabinet Office said.

The government agency revised down its assessment for the third straight month, saying that weakness is seen in consumer sentiment. In the previous month, the agency noted signs of weakness.

“Sentiment was pushed down as prices of daily necessities continued to increase amid elevated uncertainty from the Ukrainian crisis,” a senior official said.

The index, covering households with two or more members, measures consumer sentiment over the coming six months based on indicators on overall livelihood, income growth, employment and willingness to buy durable goods. All four component indicators fell in the latest survey, conducted March 8-22.

The share of households expecting prices to be higher in a year’s time rose 1.1 percentage points to 92.8%, renewing its record high for the second straight month.

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