By Max Sato
(MaceNews) – The latest surveys by the government and central bank point to a gradual pickup in consumer and business confidence in tandem with an accelerated pace of the COVID-19 vaccine rollout, but Japan is being hit by another resurgence of coronavirus cases.
The government on Thursday issued a state of emergency for Tokyo for the fourth time since April last year, reinstating its request that bars and restaurants should suspend serving alcohol at any time and close by 8 p.m., effective from July 12 until Aug. 22.
In a bid to contain the spread of the more contagious Delta variant, the government also extended less strict emergency restrictions on three surrounding prefectures – Saitama, Chiba and Kanagawa – through Aug. 22.
On the same day, Tokyo Olympics organizers decided to go ahead with the event without spectators at venues in the capital and its neighbouring prefectures. The Games will take place from July 23 to Aug. 8, followed by the Paralympics, which will run from Aug. 24 until Sept. 5.
The Economy Watchers Survey sentiment index for Japan’s current economic climate posted the first month-on-month rise in three months in June, up 9.5 points at 47.6 on a seasonally adjusted basis, after dipping 1.0 point to 38.1 in May, the Cabinet Office said earlier in the day.
Easing of restrictions on business hours last month on signs of a slower spread of the pandemic in some regions led more people to visit stores and eat out, according to respondents, while there was indication that online purchases were also gaining traction in tune with stay-home lifestyles.
Before the Watchers survey was conducted from June 25 to June 30, the government said it was easing some restrictions on economic activity in Tokyo and other prefectures, effective June 20, but decided to retain slightly less strict COVID-19 emergency measures until July 11.
Looking ahead, the Watchers outlook index, which shows sentiment about the situation two to three months ahead, marked the second straight monthly gain, up 4.8 points at 52.4 in June after rising 5.9 points to 47.6 the previous month.
Some business operators pinned hopes on “expectations” that the COVID-19 vaccination in Japan would proceed as planned should help ease restrictions on people’s movement and support consumer spending.
At the same time, some respondents expressed concerns about semiconductor shortages for automobiles and surging prices for raw materials including lumber for housing construction.
The Cabinet Office also said last week that its Consumer Confidence Survey of households with two or more people, which was conducted June 15, showed that sentiment improved for the first time in three months.
The Consumer Confidence index rose 3.3 points to 37.4 in June on a seasonally adjusted basis after falling 0.6 point to 34.1 in May.
This prompted the Cabinet Office to revise up its assessment that consumer sentiment showed “a move toward picking up continues, although conditions remain severe.” Previously, it had said “the pace of picking up has slowed.”
Consumers were more optimistic about all of the four key aspects that affect their sentiment — overall economic well-being, income gains, job prospects and whether it would be a good time to buy durable goods over the next six months.
The index on asset prices, which is not one of the sub-indexes used to calculate overall consumer confidence, rose 1.6 point to 41.4 in June after being flat in May, in line with a modest rise in the Japanese stock markets between mid-May and mid-June.
The survey also showed that for the first time in two months, more people thought prices for daily necessities would rise a year from now and fewer respondents believed prices would fall.
The Bank of Japan’s quarterly consumer survey conducted from May 7 to June 2 and released Thursday showed that sentiment improved for the third quarter in a row, but that the majority continued feeling things were worse. The survey also indicated an increase in inflation expectations.
The BOJ’s consumer sentiment diffusion index for the current climate rose by 0.8 point to -61.6 in June after gaining 0.8 points to -69.4 in March. It was still deep in negative territory but above the recent bottom of -75.6 in September 2020.
The index is calculated by subtracting the percentage of people who believe economic conditions have deteriorated compared to a year earlier, from the percentage of those reporting an improvement. A negative figure indicates the majority of those polled see things were worse than a year earlier.
However, the central bank’s consumer sentiment outlook index projecting conditions a year ahead marked the first quarterly drop in five quarters, down 6.4 points at -14.9 in June after improving 14.6 points to -8.5 in March
The recent bottom for this index was -42.2 hit in March 2020.
The BOJ survey also showed that the percentage of respondents expecting prices to rise in the next year stood at 66.8% in June, up from 62.4% in March. Those saying prices would be little changed 12 months ahead fell to 27.2% from
30.6%. The share of people expecting lower prices declined to 4.3% from 6.1%.
Both the BOJ and the government expect consumer prices to remain weak for now.
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Contact this reporter: max@macenews.com.
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