Business sentiment among workers with jobs sensitive to economic trends in Japan marked the sharpest drop in 13 months in April as the coronavirus pandemic continued to rage and a state of emergency was declared for Tokyo and some other urban areas, government data showed Thursday.
The diffusion index of confidence in current conditions compared with three months earlier among “economy watchers,” such as taxi drivers and restaurant staff, tumbled 9.9 points from March to 39.1, the first fall in three months, according to the Cabinet Office.
The drop was the largest since a plunge of 13.0 points in March last year, when uncertainty over the economic outlook began to grow rapidly due to the spread of the virus across the country.
The data showed the slump was more pronounced in businesses related to consumer spending such as retailers and restaurants than in the corporate sector.
A reading below 50 indicates that more respondents reported worsening conditions than improving ones.
The Cabinet Office downgraded its assessment, following upgrades for two straight months, saying the economy has shown “some weakness in its recovery.” In March, it said the economy was “picking up.”
It polled 2,050 workers for six days from April 25, when Tokyo and the three western prefectures of Osaka, Kyoto and Hyogo were placed under Japan’s third state of emergency in the wake of surging infections, driven by the spread of more contagious variants of the virus. Of those, 1,817, or 88.6%, responded.
Prime Minister Yoshihide Suga earlier this month extended the emergency to May 31, from its initial end date of May 11, and expanded the areas covered by stricter anti-virus measures to Aichi and Fukuoka prefectures.
At that time, the government also extended a quasi-state of emergency covering Saitama, Chiba, Kanagawa, Ehime and Okinawa prefectures to the end of May and added Hokkaido — which on Thursday reported a record 712 more cases of the virus — as well as Gifu and Mie.
Still, the latest benchmark index was higher than 31.2 posted in January, when Tokyo and 10 out of the country’s 47 prefectures were placed under its second state of emergency. The measure was fully lifted in March.
“The sentiment improved in March after the (second) emergency declaration was ended, but another declaration deteriorated the index again in April,” a government official told reporters.
A restaurant worker in the Hokuriku region in central Japan was quoted as saying, “Sales at night have been considerably small these days” following a request to cut business hours.
A worker at an advertising agency in the Tokai region reported that events and business plans scheduled for this summer could be scaled down due to “the impact of the variants recently.”
The diffusion index gauging business sentiment regarding the coming months also worsened in April, down 8.1 points from the previous month to 41.7, declining for the second month in a row.
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