Workers whose jobs are sensitive to the economy, including taxi drivers and restaurateurs, are reporting a poor business outlook as the depreciation of the yen pushes up the cost of imports, government data indicated Wednesday.
The diffusion index of how these “economy watchers” expect the economy to perform in coming months fell by 1.7 points from August to 48.7, down for the fourth straight month, the Cabinet Office said in a monthly report.
The index fell below the threshold of 50 for the first time since March, one month before the consumption tax was raised on April 1 to 8 percent.
The diffusion index of sentiment over the current economic situation, meanwhile, was flat at 47.4, staying below 50 for the second consecutive month.
The government said the survey suggests the economy is “moderately recovering” and the negative reaction to a rush in demand ahead of the tax increase is beginning to wane.
It added, however, that fears about a rise in energy and other commodity prices are growing.
The index is based on whether respondents believe economic conditions have improved or worsened over the past three months. A reading of 50 indicates that those polled generally believe economic conditions are flat.
The Cabinet Office surveyed 2,050 workers across Japan from Sept. 25 to 30, of whom 1,863, or 90.9 percent, responded.
Amid speculation that the Bank of Japan will implement additional monetary easing to prop up the sluggish economy and that the U.S.-Japan interest rate gap will broaden, the yen has been plunging against the dollar in recent months.
A falling yen usually supports exports by making Japanese products cheaper abroad and boosts the value of overseas revenues in yen terms, though it drives up import prices.
Japan currently depends on imports for around 90 percent of its energy needs and about 60 percent of its food supplies. A surge in import costs accelerates inflation at home, undermining household and business confidence.