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The “economy watchers” index fell at its fastest pace ever in March as business sentiment plunged after the March 11 disaster struck, the Cabinet Office said Friday.

The diffusion index measuring the confidence of shop clerks, hotel managers, taxi drivers and others whose jobs are considered sensitive to changes in the economy dropped to 27.7 in the reporting month compared with 48.4 in February.

Readings below 50 suggest that pessimistic views outweigh optimistic views.

The rate of deterioration in March was the fastest since record-keeping began in January 2000. The reading itself was the lowest since December 2008, when the global financial turmoil that followed the collapse of U.S. investment bank Lehman Brothers Holdings Inc. in September dragged the index down to 15.9.

The office downgraded its assessment of the monthly survey and said the so-called watchers see the economy “rapidly falling into a severe situation.” In the previous month, it said the economy was “showing some development toward recovery.”

All three components — household spending, corporate activity and employment — fell.

The respondents cited a variety of negative factors that followed the disaster, such as retailers being forced to cut business hours because of power shortages from the nuclear power plant crisis, foreign tourists canceling hotel reservations, factories unable to restart, and companies that have become more reluctant to hire.

Prospects for the future are gloomier.

An index that gauges watchers’ sentiment about two or three months ahead dived to 26.6 from 47.2. All three of its components declined.

The government conducted the poll from March 25 to 31 on 2,050 people across the country, receiving valid answers from 1,848, or 90.1 percent.

Grad job offers nixed

The labor ministry said Friday that 173 new graduates had job offers canceled as of Wednesday, up 50 from a week earlier, in the aftermath of the March 11 disaster.

Among them, two thirds, or 110, were high school graduates, while another 1,051 new graduates had their starting dates delayed until after the April 1 start of the business year, according to the Ministry of Health, Labor and Welfare.

Labor minister Ritsuo Hosokawa told a press conference that these numbers will rise further. “We will continue to call on businesses to employ disaster-affected people,” he said.

To address the situation, the government has set up inquiry counters at labor offices nationwide, while providing more financial incentives for companies to employ those who graduated from schools during the past three years.

However, a labor officer in the severely damaged coastal city of Kesennuma, Miyagi Prefecture, said, “Many companies headquartered in this city will dismiss their employees” so they will not be able to hire new graduates.

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