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Business sentiment in Japan fell for the first time in four months in May, a private-sector survey showed Thursday.

The business sentiment diffusion index dropped 0.8 point from April to 37.5, partly reflecting the extension and expansion of the government’s third COVID-19 state of emergency, according to the Teikoku Databank Ltd. survey.

Sentiment worsened in eight of the 10 surveyed industries.

The index sank 1.6 points to 33.1 in the retail sector as people refrained from going out and stores suspended operations or cut opening hours.

The service industry’s index was down 0.4 point at 37.5, with the indexes for the restaurant industry and hotels dropping 1.9 points and 3.0 points, respectively.

Business sentiment fell in all 10 regions. The index sagged 1.7 points to 34.5 in Hokkaido, 1.8 points to 36 in the Chugoku region of western Honshu and 2 points to 37.5 in the Kyushu region, which also includes Okinawa Prefecture.

Sentiment “will go up gradually” once the state of emergency is lifted and economic activities return to normal, a Teikoku Databank official said.

Meanwhile, Shunsuke Kobayashi, chief economist at Mizuho Securities Co., said that the government’s repeated declaration of a state of emergency without a vision “makes companies’ business planning difficult.”

“The government should clarify its policy of containing coronavirus infections by autumn and support measures for businesses,” he added.

The online survey was conducted from May 18 to 31, with valid answers given by 11,242 companies.

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