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Business confidence among people with jobs sensitive to economic conditions in Japan worsened for the second straight month in May, with a sudden plunge in stock prices blurring the outlook for the country's economic recovery, the government said Monday.
The diffusion index of sentiment in the nation's current economic situation among so-called "economy watchers," such as taxi drivers and restaurant employees, fell 0.8 point from April to 55.7, the Cabinet Office said in its monthly survey.
The index for the direction of economic conditions in the coming few months dropped 1.6 points to 56.2, down for the first time in two months, the office added.
The deterioration came as financial markets have become volatile amid growing skepticism about whether Prime Minister Shinzo Abe's policies dubbed "Abenomics," centering on drastic monetary easing and massive fiscal spending, can really bolster Japan's economy.
The equity market turbulence began May 23, when the 225-issue Nikkei Stock Average tumbled 7 percent, dampening hopes among companies and workers that the world's third-largest economy will return to a full-fledged growth path, some analysts said.
The government, however, left unchanged its basic assessment of the monthly survey in May, saying the watchers suggest the economy is "picking up."
The diffusion index to gauge the business sentiment is based on whether respondents see economic conditions as improving or worsening compared with three months before. A reading of 50 indicates that those polled generally believe economic conditions are flat.
The Cabinet Office surveyed 2,050 workers across Japan from May 25 to 31, of whom 1,879, or 91.7 percent, responded.
Other data released by the office showed Monday that Japan's consumer confidence improved for the fifth straight month in May as the weaker yen, triggered by the Bank of Japan's aggressive monetary easing, pushed up stock prices earlier in the month.
The seasonally adjusted index of sentiment among households made up of two or more people climbed 1.2 points to 45.7 from the previous month, the highest level since May 2005, the government said, although it still stayed below 50. Readings below 50 indicate pessimists outnumber optimists.
But the results are based on valid answers provided by 6,400 households polled May 15, before financial markets began to fluctuate widely.
The government "will monitor the impact" of the recent market turmoil on consumer sentiment ahead, a Cabinet Office official said.