The “economy watchers” index of business confidence tied a record high in March as hopes grew that Prime Minister Shinzo Abe’s pursuit of drastic monetary easing and big public works projects would give the economy a temporary shot in the arm, the government said Monday.
The index, also called the diffusion index, gauges sentiment based on the opinions of those on the front lines of the economy, including taxi drivers and hotel and restaurant workers. Respondents are asked whether economic conditions are improving or deteriorating compared with three months before. A reading of 50 indicates those polled generally believe economic conditions are flat.
The coincident DI, which gauges current economic conditions, climbed 4.1 points from February to 57.3, up for a fifth consecutive month and tying the record set in March 2006, as surging stocks and the weaker yen buoyed sentiment, the Cabinet Office said in its monthly survey.
But fears about the surge in import costs the weaker yen will cause pushed the leading DI, which gauges sentiment for the coming few months, down 0.2 point from February to 57.5, the office said, underscoring one of the negative aspects of “Abenomics.”
A falling yen usually drives up import prices but boosts exports by making Japanese products cheaper in other countries.
In February, the leading DI rose 1.2 points to 57.7, the highest since compilation of the statistic began in January 2000.
Based on the mixed readings, the government left its basic assessment of the monthly survey in March unchanged, saying the watchers suggest the economy is “picking up.”
In the reporting month, the index of economic conditions for household spending jumped 5.2 points to 56.9, while the index for corporate activity rose 1.1 points to 56.1 and the index for employment gained 4.5 points to 63.1.
The Cabinet Office surveyed 1,854 workers across Japan from March 25 to 31.
As speculation intensified that the Bank of Japan would act to make financial conditions easier, the yen slid versus the dollar by 18.8 percent from a year earlier in February, the latest data from the Finance Ministry showed Monday.