MNI 5 THINGS: Japan July Sentiment Hit by Killer Rains, Heat

--Japan July Econ Watchers Current Index 46.6; June 48.1

--Japan July Watchers Current Index Posts 1st Drop in 2 Months

--Japan July Watchers Outlook Index 49.0; June 50.0

--Japan July Watchers Outlook Index Posts 1st Drop in 2 Months

--Japan Govt Repeats: Signs of Moderate Recovery Pausing

--Japan Govt: Firms Concerned of Labor Shortages, Rising Prices

--Japan Offl: July Sentiment Hit by Rain Disaster, Heat Waves

     TOKYO (MNI) - Japan's current and outlook sentiment indexes plunged in

July, hit by heavy rains in southwestern regions that killed more than 200

people and destroyed social infrastructure as well as killer heat waves that

swept across the country, a key government survey released Wednesday showed.

     The key points from the latest monthly Economy Watchers Survey, which was

conducted between July 25 and July 31.

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

fell 1.5 points to a nearly two-year low of 46.6 in July on a seasonally

adjusted basis, the first drop in two months after rising 1.0 point to 48.1 in

June. The index stayed below the key level of 50 for the seventh consecutive

month. While major car makers saw solid exports in July, transport firms

continued to suffer from labor shortages and rising fuel costs. The rain

disaster cut off some delivery routes in western Japan.

     * The Watchers outlook index showed sentiment about the situation two to

three months ahead also marked the first decline in two months, falling 1.0

point to 49.0 in July after gaining 0.8 point to 50.0 in June. In the wake of

the rain disaster, supply chain networks in Japan are recovering gradually but

massive flooding and mud slides caused serious damage to vegetable and fruit

farms.

     * "The heat waves had a mixed impact. There was strong retail demand for

beverages, air conditioners, refrigerators and fans while people, particularly

seniors, stayed home, hurting restaurants and theme parks," Shigeru Hirota,

Cabinet Office director of regional economies, told reporters. "Looking ahead,

there are concerns about the continued drag from the heavy rains and heat waves

as they have pushed up the prices for farm produce and disrupted land

transportation networks."

     * The Cabinet Office maintained its overall economic assessment based on

the Economy Watchers Survey, saying, "The gradual recovery continues but there

are signs that it is taking a breather." It also said the sentiment was hit by

the rain disaster in July.

     "Looking ahead, there remain expectations for orders and business

investment, although there are concerns over labor shortages and rising costs,"

the Cabinet Office said, repeating its recent statement, while adding there were

lingering concerns about the effects of the disaster.

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

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