Business / Economy

Sentiment among workers on the front line of Japan's economy hits three-year low

Kyodo

Business sentiment among workers with jobs sensitive to economic trends hit a three-year low in June as consumers kept their purse strings tight following the unusual 10-day holiday the previous month, according to government data.

The diffusion index of confidence among “economy watchers” such as taxi drivers and restaurant staff edged down 0.1 point from May to 44.0, the Cabinet Office said Monday.

But the deterioration was limited, helped by demand ahead of the consumption tax hike planned for October.

The index fell for the second consecutive month, hitting the lowest level since June 2016. A reading below 50 indicates that more respondents reported worsening rather than improving conditions over the past three months.

The survey result indicates that “the economy has shown some weakness in its recovery,” the office said, maintaining its basic assessment.

Looking ahead, it warned of risks from developments overseas, including the prolonged trade conflict between the United States and China.

A separate index that gauges the outlook for economic conditions in the coming months climbed 0.2 point to 45.8.

Among respondents to the survey, a travel agency worker in central Honshu pointed to falling demand from individual tourists following a surge during the 10-day Golden Week string of holidays from late April to early May that marked Emperor Naruhito’s ascent to the Chrysanthemum Throne.

A worker at a car dealership in the Tokai region said better sales than last year apparently reflected demand ahead of the consumption tax hike to 10 percent from 8 percent.

The Cabinet Office polled 2,050 workers from June 25 to 30, of whom 1,820, or 88.8 percent, responded.

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