Business sentiment among workers with jobs sensitive to economic trends deteriorated sharply to its worst level in nearly nine years in February due to growing concerns over the coronavirus outbreak.
The diffusion index of confidence among “economy watchers” such as taxi drivers and restaurant staff fell 14.5 points from January to 27.4, the lowest since the 23.9 logged in April 2011 in the wake of the Great East Japan Earthquake and tsunami in the Tohoku region.
The pace of decline was the fastest since April 2014, when the index dropped 15.6 points after the consumption tax rate was raised to 8 percent from 5 percent. The tax rate was further increased to 10 percent last October.
A reading below 50 indicates that more respondents reported worsening conditions rather than improving ones.
“The condition has become severe rapidly due to the influence of the new coronavirus outbreak,” the Cabinet Office said Monday in its overall assessment, downgrading from January when it said that “the economy has shown weak movement in its recovery.”
A worker at a restaurant in the southern Kanto region near Tokyo said anxiety over the coronavirus, along with government requests to refrain from social activities, began having a significant effect on customer numbers in mid-February, describing the decrease as “unprecedented.”
Meanwhile, a worker at a pharmacy in the Tohoku region said the number of customers was increasing slightly as items such as sanitizer to cope with the virus are in high demand, although people have generally tightened their purse strings.
The Cabinet Office polled 2,050 workers from Feb. 25 to 29, of whom 1,827, or 89.1 percent, responded.
A government official who briefed reporters said that the latest results reflect “people’s sense of uncertainty” over when the virus crisis will subside.
“The survey was conducted when the situation was getting worse day by day amid a spate of event cancellations and closures of schools across the country, which greatly influenced the (sentiment) figures,” the official said.
Looking forward, the diffusion index, which gauges the economic outlook in the coming months, plummeted 17.2 points from the previous month to 24.6, the lowest level since it logged 23.8 in January 2009 amid the global financial crisis following the failure of Lehman Brothers Holdings Inc. the previous year.
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