Business sentiment among workers with jobs sensitive to economic trends rose in August for the first time in four months, supported by solid sales of summer items and last-minute buying ahead of the consumption tax hike scheduled for Oct. 1, according to government data.
The diffusion index of confidence among "economy watchers" such as taxi drivers and restaurant staff increased 1.6 points from July to 42.8, the Cabinet Office said Monday.
A reading below 50 indicates that more respondents reported worsening rather than improving conditions over the past three months.
But the diffusion index gauging the economic outlook in the coming months tumbled 4.6 points to 39.7, the steepest drop since June 2016 and the lowest level since March 2014.
The office maintained its assessment, saying that "the economy has shown weak movement in its recovery. As for the future, there are concerns observed about the consumption tax increase and situations overseas."
The survey was conducted less than two months before the government is scheduled to raise the consumption tax to 10 percent from the current 8 percent.
An official who briefed reporters said economy watchers started to cite the tax hike as reasons to judge the economic conditions in the survey, although the frequency is less than 2014, when rate was raised to 8 percent from 5 percent.
A home electronics shop clerk in Hokkaido said big-ticket goods, including 4K ultra high-definition televisions, sold well in August.
Looking ahead, a department store employee in the Kanto region expected sales to tumble due partly to a possible plunge after the tax hike.
The survey covered 2,050 people from Aug. 25 to 31, of whom 1,849, or 90.2 percent, responded.