Consumer confidence about the nation's economic conditions for the remainder of the year plunged in August to a record low, Nippon Research Institute said Monday.
The consumer sentiment index, designed to rise above 100 when a majority of consumers expect worse economic conditions in the year ahead, jumped 16 points from June to 148, hitting its highest level since the Cabinet Office-affiliated institute began its bimonthly survey in April 1977, NRI said.
The previous high of 142 came in December 1998.
The 16-point surge is the largest point rise since the index rose 14 points in December 1993, when it rose to 133 from 119 on concerns that the yen's strength against the dollar would deliver a savage blow to corporate earnings, it said. Uncertainty over the course of Prime Minister Junichiro Koizumi's structural reforms is behind the deteriorating sentiment, according to the institute.
Sluggish share prices, combined with the yen's rise against the dollar, weighed on consumer confidence, while a series of announcements about downward revisions for corporate earnings forecasts and restructuring plans worked to further erode consumer confidence, it said.
Given these circumstances, NRI has urged the government to establish an employment safety net and create more jobs in a bid to boost consumer confidence.
The government should also make the public more aware of the degree of social suffering that will result from the implementation of its structural reform measures, the institute said.