Economy watcher survey worsens for 5th month in row

Business confidence among people in Japan with jobs sensitive to economic conditions worsened for the fifth straight month in August as severe heat and torrential rain slowed retail sales, government data showed Monday.

The diffusion index of sentiment over the nation's current economic situation among so-called "economy watchers," such as taxi drivers and restaurant employees, was down 1.1 points from the previous month to 51.2, the Cabinet Office said in a monthly survey.

However, the index stayed above the threshold line of 50 for the seventh straight month, leaving the government's basic assessment that the economy is "gradually picking up" unchanged from July.

The index for the direction of economic conditions in the coming few months also dropped 2.4 points to 51.2 in August, down for the first time in two months.

The diffusion index to the business sentiment is based on whether respondents believe economic conditions have improved or worsened over the past three months. A reading of 50 indicates that those polled generally believe economic conditions are flat.

Referring to the deterioration in the benchmark index, a Cabinet Office official said, "While the severe heat helped boost the sales of air conditioners and refrigerators, it decreased the number of customers visiting supermarkets and convenience stores. It had a negative effect."

The Cabinet Office surveyed 2,050 workers across Japan from Aug. 25 to 31, of whom 1,886, or 92.0 percent, responded.

A separate survey also showed that consumer confidence worsened in August for the third consecutive month due to increased commodity prices amid a slight decline in wages.

The seasonally adjusted index of sentiment among households with two or more people fell 0.6 point from July to 43.0, the Cabinet Office said.

The office downgraded its basic assessment of the index for the second straight month, saying improvement in consumer confidence "has shown signs of leveling off."

Last month it said, "The pace of improvement is slowing."

The survey also showed that 87.3 percent of households expect consumer prices to increase in the year ahead, up 1.1 percentage points from July and the highest level since August 2008.

The survey conducted Aug. 15 covered 8,400 households and valid responses were received from 5,958 households, or 70.9 percent.