• Kyodo

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Business confidence among people with jobs sensitive to the nation’s economic conditions improved in July on robust retail sales due to hot weather and accelerated reconstruction work in areas devastated by last year’s tsunami, the government said Wednesday.

The diffusion index about the sentiment among “economy watchers” such as shop clerks, hotel managers and taxi drivers rose to 44.2 last month from 43.8 in June for the first rise in four months. Readings below 50 indicate pessimists outnumber optimists.

The government retained its basic assessment of the monthly poll, saying the workers have seen the economy showing some “weak development” after moderately recovering in the recent past.

Of the three key components, household spending and business activities picked up, while employment conditions declined.

Some retailers said they had registered strong sales of cold beverages and ice cream, as well as home appliances, including air conditioners and refrigerators.

Negative comments came notably from car dealers expressing concern about the tapering off of the government subsidy program for the purchase of environmentally friendly vehicles that had underpinned private consumption.

Construction firms and general machinery makers remained optimistic as reconstruction work proceeded faster in the areas damaged by the March 2011 megaquake and tsunami, although pessimistic views remained for slower exports as a result of the stronger yen and the gloomier outlook for the world economy.

Separately, the leading index, which measures confidence a few months ahead, slid to 44.9 from 45.7, the third straight monthly fall, due largely to sentiment among manufacturers hurt by the prospects that the auto subsidy program will soon end with the government reaching the limit of the program’s budget.

The Cabinet Office survey received valid responses from 1,872 people nationwide.

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