EPA’s confidence index rises for third quarter

The Economic Planning Agency announced Friday that its consumer confidence index improved in the January-March period for the third consecutive quarter.

The EPA said the index, as of March 15, rose to 42.2 after seasonal adjustment, up 0.7 point from the previous quarter. The reading is the highest since September 1996, when the index stood at 43.3.

The September 1996 figure was logged several months before the Japanese economy slipped back into a downward spiral due to the consumption tax hike on April 1, 1997, and problems in the banking system.

An EPA official said: “Consumers’ psychology is improving and pessimistic views on the economic outlook are retreating, but whether the improving psychology will buoy personal consumption depends on the course of income and employment conditions down the track.” The March index’s reading followed a revised 41.5 for the October-December quarter and 40.2 in the July-September period last year.

The index is used as an indication for measuring the strength of consumers’ spending appetites in the coming six months or so.

The EPA survey, which gathered data for the index, covered 5,040 households nationwide, of which 99.9 percent responded.

The respondents answered questions about whether they believe conditions in five key areas of the economy — overall livelihood, income growth, prices, employment and readiness to buy durable goods — will improve over the subsequent six months.

The EPA gives points to replies — 1 for “will improve,” 0.75 for “will improve somewhat,” 0.5 for “will remain unchanged,” 0.25 for “will worsen a bit,” and 0 for “will worsen.”

The calculation formula for the consumer confidence index is designed to produce a reading of 50, if all respondents pick the answer “will remain unchanged” to all questions.

In March, consumer confidence improved in all but one area, the EPA said.

The March index fell 0.2 point from the previous quarter on overall livelihood, but rose 1.7 points on employment, 0.9 point on prices, 0.5 point on the willingness to buy durable goods and 0.3 point on income growth, it added.

Tertiary industry up

Economic activity in Japan’s tertiary industry in February rose 0.1 percent from the previous month for the fourth consecutive month of increase, the Ministry of International Trade and Industry said in a preliminary report released Friday.

The index of activity in the tertiary industry in February stood at a seasonally adjusted 105.1, against the base of 100 set in 1995.

A ministry official said brisk securities transactions, condominium sales and mobile telecommunications largely contributed to the industry’s upward trend.

The gauge for real estate, including condominium sales, rose 2.4 percent.

Activities related to personal consumption are also on the rise, especially in the areas of overseas travel and dining, the official said.

The latest figure brings the index of overall industrial activity, including industrial output, down 0.1 percent from January to 102.1.

The index of overall industrial activity includes a 0.6 percent drop in industrial output, which was calculated after adjustment for the leap year factor.