Japan July Econ Watchers Sentiment Dips on Labor, Weather

--Japan July Economy Watchers S/A Current Index 49.7; June 50.0

--Japan July Watchers Current Index Posts 1st M/M Drop in 4 Months

--Japan July Watchers S/A Outlook Index 50.3; June 50.5

--Japan July Watchers Outlook Index Posts 1st M/M Drop in 4 Months

--Japan Govt Keeps View: Economic Pickup Continues

--Japan Govt: Capex Expected But Labor Shortages Concerned

     TOKYO (MNI) - Results of the Cabinet Office's monthly Economy Watchers

Survey conducted between July 25 and July 31 were released Tuesday.

     The survey indicates whether respondents with jobs most sensitive to

economic conditions -- taxi and truck drivers, department-store sales staff and

restaurant and shop owners -- think economic conditions have improved or

worsened from three months before.

     * The Economy Watchers sentiment index for Japan's current economic climate

posted the first month-on-month drop in four months, down 0.3 point at 49.7 in

July on a seasonally adjusted basis after rising sharply by 1.4 points in June,

but the level remained relatively high in the current recovery phase.

     * The slight drop in sentiment reflects the adverse effects of chronic

labor shortages and weather factors. Heavy rainfalls and flooding in southern

Japan in early July caused casualties and long-lasting damage while heat waves

made consumers wary of buying fresh food for fear of food poisoning. On the

other hand, high temperatures boosted demand for air conditioners. 

     * "Labor shortages are spreading throughout the economy," Cabinet Office

director of regional economies Masahiko Tsutsumi told reporters. "Staffing

agencies and want-ad publishers see labor shortages as positive while

construction, transportation and security firms are reporting lost business

opportunities."

     * The Economy Watchers outlook index showed sentiment regarding the next

two to three months also marked the first month-on-month fall in four months,

down 0.2 point at 50.3 in July after a 0.9 point rise in June.

     * The Cabinet Office maintained its overall economic assessment from the

previous month after updating it in its report for May, saying, "The pickup

continues."

     * "Looking ahead, there are expectations for continued business investment,

although there are concerns over labor shortages," the government said,

repeating its assessment from the previous report.

     * "The watchers' sentiment about capital investment has been rising

gradually but the report does not suggest a sharp increase," Tsutsumi said.

"Firms expect an increase in investment for raising production capacity or

coping with labor shortages. Some firms also see their clients increase capex."

--MNI Tokyo Bureau; tel: +81 90-4670-5309; email: max.sato@marketnews.com

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