By Max Sato
(MaceNews) – Japan’s government on Friday upgraded its assessment of private consumption for the first time in three months after downgrading it only last month, while maintaining its cautious view of overall domestic economic health amid a global spike in coronavirus cases.
The government Cabinet Office report described the current state of the economy as “showing signs of a pickup,” a statement unchanged since July when it revised up its overview.
As for the near-term outlook in its monthly economic report, the government repeated, “The economy is expected to continue showing signs of picking up, supported by the effects of the policies and improvement in overseas economies.” It noted that the improvement in China has become clearer.
At the same time, the government warned about the drag from second waves of the pandemic in many parts of the world as well as the effects of fluctuations in the financial and capital markets.
Key points from the report:
On consumption, the government said it is “picking up.” Last month, it downgraded its view, saying consumer spending was “picking up, although it is marking time in some areas.” In August, it had said consumption “has been picking up recently.”
The Cabinet Office tends to change its views on segments of the economy often, reacting to the latest indicators, while the Bank of Japan takes a longer-term approach to its assessment.
Japan’s current and outlook sentiment indexes have rebounded to well above their pre-COVID levels as consumers are adapting to a new lifestyle during the pandemic. The government is trying to prop up the battered tourism industry by financing part of domestic travel costs by residents while restricting entries by foreigners and re-entries by non-Japanese permanent residents.
The Economy Watchers sentiment index for Japan’s current economic climate jumped 5.4 points to more than a two-year high of 49.3 in September on a seasonally adjusted basis, the fifth straight monthly rise, after gaining 2.8 points. However, the index has stayed below the key level of 50 since early 2018.
The Watchers outlook index showed sentiment about the situation two to three months ahead marked the second straight rise in September, up 5.9 points to 48.3 after rising 6.4 points in August.
The Cabinet Office upgraded its overall economic assessment based on the Economy Watchers Survey released earlier this month, saying the economy is “picking up” despite the lingering effects of coronavirus infections. Previously, it stated that “there were signs of a pickup.”
Other details:
The government maintained its assessment of most of the other key components of the economy in the monthly economic report.
* Business investment is showing weakness (downgraded in September).
* Exports are picking up (upgraded in September).
* Industrial production is showing signs of improvement (upgraded in September).
* Corporate profits are decreasing substantially (downgraded in April)
* Employment conditions are improving with some soft spots (upgraded in September).
* Consumer prices are flat (downgraded in March).