• Kyodo


Business sentiment among workers in Japan with jobs sensitive to economic trends rose in May for the first time in four months, as the country emerged from a coronavirus state of emergency, government data showed Monday.

The diffusion index of confidence among “economy watchers” such as taxi drivers and restaurant staff rose 7.6 points from the previous month to 15.5, the Cabinet Office said.

Still, it was the third-lowest reading since comparable data became available in January 2002, behind 7.9 in April this year and 14.2 in March as the pandemic hindered economic activities across the country.

The outlook, however, looks set to continue improving, with the diffusion index gauging sentiment for the coming months increasing a record 19.9 points from April to 36.5. A reading below 50 indicates that more respondents reported worsening conditions than improving ones.

The Cabinet Office upgraded its assessment for the first time in 15 months, saying that while the economy remains in quite a severe state due to the pandemic, its rate of deterioration is slowing.

The recent indexes were far below around 20 marked in the wake of the 2008 financial crisis and after the massive earthquake and tsunami that devastated northeastern Japan in 2011.

The government had asked people to refrain from going out and nonessential businesses to shut under a state of emergency, initially issued on April 7 for Tokyo and six other areas and expanded nationwide about a week later.

But the emergency declaration was lifted for 39 of the country’s 47 prefectures on May 14 and fully lifted on May 25 due to a fall in the number of new COVID-19 cases.

The Cabinet Office polled 2,050 workers from May 25 to 31, of whom 1,823 or 88.9 percent responded.

“We can say that the survey result reflects the impact of the lifting of the state of emergency, but the (index) level is still considerably low,” a Cabinet Office official said at a briefing. “Comments we’ve gotten from watchers are also suggesting that the situation is still severe.”

A hotel worker in the Koshinetsu region was quoted as saying his workplace saw an 85 percent drop in revenue in May, as “no guests came” during the Golden Week holidays from late April to early May, one of the busiest seasons for the tourism industry in a year, affected by the state of emergency.

A worker at a machiner-maker in the northern Kanto region said his company’s sales in the reporting month were halved from a year ago and the production line “has been completely suspended.”

Some workers hope government stimulus measures to cushion the virus impact will help spur consumer spending. An employee at a home appliance store in the Chugoku region said that a ¥100,000 ($913) cash handout program to all citizens will likely boost sales at the store.

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