Sentiment on the current state of the economy among people who deal directly with consumers improved in August to a 16-month high, according to a government survey released Monday.

The diffusion index of current economic conditions among the “economy watchers” rose 1.5 points from July to 46.4 for the third straight monthly increase, with its three sub-indexes for household spending, corporate activity and employment all rising, the Cabinet Office said.

The 46.4 reading is the highest since April 2002.

The index is based on whether respondents — taxi and truck drivers, department store sales staff, and restaurant and shop owners — see economic conditions improving or worsening compared with three months earlier.

Their sentiment concerning the near-term prospects for the economy also improved, with the index for economic conditions in the next few months gaining 2.1 points to 48.9, the highest since May 2002. This index rose for the fifth straight month.

The Cabinet Office attributed the rise in the index of the current state of the economy mainly to strong sales of certain products, such as autumn clothing and newly released home appliance products, which more than offset the disappointing sales of summer wear and beverages due to the unusually cool summer.

For example, a home appliance volume retailer in the Hokuriku region reported brisk sales of plasma-display and liquid-crystal television sets.

Expectations of continued strong sales of home appliances also played a role in the improvement of the index for the near-term course of the economy, the Cabinet Office said.

Growing signs of recovery in the job market enhanced economy watchers’ optimism, with the sub-index for current employment conditions rising 5.2 points to 55.8, staying above the boom-or-bust line of 50 for the second straight month.

However, the government maintained its overall estimate on current economic conditions, saying the economy is “continuing to pick up,” adopting the same expression it used the month before.

Hidehiro Iwaki, a Cabinet Office official in charge of the survey, said he took into consideration the fact that the margin of the rise in the index for current economic conditions has gradually become smaller over the past three months.

The Cabinet Office conducted the survey on 2,050 workers across Japan between Aug. 25 and 31, of whom 1,807, or 88.1 percent, responded.

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