Business / Economy

Economy watcher sentiment rises in December on eased impact of Japan's tax hike

Kyodo

Business sentiment among workers with jobs sensitive to economic trends slightly improved in December as the negative impact from the consumption tax hike eased, government data showed Tuesday.

The diffusion index of sentiment among “economy watchers” such as taxi drivers and restaurant staff stood at 39.8, up 0.4 point from November, according to a survey by the Cabinet Office. It rose 2.7 points in November, one month after the consumption tax rate was raised to 10 percent from 8 percent.

A reading above 50 indicates that more respondents reported improving conditions rather than worsening ones over the previous three months.

A worker at a department store in the Kanto region expected sales to improve in December after worsening in October and November due to the higher tax rate.

A government official who briefed reporters said improving sentiment in the manufacturing sector helped boost the index after the United States and China agreed on a temporary truce in their prolonged trade conflict in the reporting month.

The office maintained its assessment, saying, “The economy has shown weak movement in its recovery.”

Looking ahead, the diffusion index gauging the economic outlook in the coming months fell 0.3 point from the previous month to 45.4.

A bookstore clerk in the Hokuriku region said adverse impacts stemming from the tax hike have faded but there seem to be no factors that will help improve the economy.

The office polled 2,050 workers from Dec. 25 to 31, of whom 1,818, or 88.7 percent, responded.

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