Japan’s Household Confidence Climbs for Sixth Month on Stimulus
Japan’s household sentiment rose for a sixth month in June, adding to signs that the deepest postwar recession may be easing.
The confidence index climbed to 37.6 from 35.7 in May, the Cabinet Office said today in Tokyo. It has improved every month since tumbling to a record low of 26.2 in December. A number below 50 means pessimists outnumber optimists.
Prime Minister Taro Aso’s stimulus packages are spurring household spending, which ended a record 14-month losing streak in May. The boost may not last as unemployment at a five-year high and tumbling wages signal consumers will need to tighten their purse strings just as exports and industrial output show signs of rebounding.
“The economic packages are supporting households and making them feel a bit better about the economy,” said Yasukazu Shimizu, a senior market economist at Mizuho Securities Co. in Tokyo. “Still, we shouldn’t expect a solid rebound in consumer spending because it will take very long time for people to benefit from a recovery in production and exports.”
Sentiment among merchants rose to the highest since September 2007 this month, a separate report last week showed. Household spending advanced for the first time in 15 months in May. The government has given cash handouts of 12,000 yen ($129) to each resident, tax breaks and subsidies for the purchase of fuel-efficient cars and incentives for buying eco-friendly consumer electrics guaranteed online payday loans.
As a result, the decline in car sales slowed for a fourth month in June to 13.5 percent, according to Japan Auto Dealers Association. Sales of flat-screen televisions, refrigerators and air conditioners rose 18 percent from a year earlier, according to Tokyo-based researcher Gfk Marketing Service Japan Ltd.
Although there are some positive signs, “downside risks persist,” Economic and Fiscal Policy Minister Yoshimasa Hayashi said last week. “If stocks keep falling and the yen continues strengthening, that will affect sentiment and exports.”
The Nikkei 225 Stock Average has fallen 8 percent since it rose to an eight-month high on June 12. Other data in the past week also pointed to a fragile rebound — the jobless rate rose to 5.2 percent in May and wages dropped for a 12th month, extending their longest losing streak in five years.
Summer bonuses at Japan’s largest companies will slide a record 18.3 percent this year, according to a survey published last month by the Keidanren, the country’s biggest business lobby. The number of travelers this summer will fall 1.7 percent, JTB Corp., Japan’s largest travel agency said last week.
Filed under: money by Finance Boss