MNI BRIEF: Japan Aug Sentiment Index Falls

The Japanese sentiment index fell a seasonally adjusted 0.8 points to 53.6 in Aug from 54.4 in July, its first drop in two months, while the outlook index for two-three months ahead also posted its first decline in two months, falling 2.7 points to 51.4 from 54.1 the prior month, according to the Economy Watchers report released by the Cabinet Office on Friday.

Worsening of all the three components linked to households, firms and the labour market drove the falls, and will cloud the Bank of Japan’s view that private consumption will likely continue to increase moderately.

An official at the Cabinet Office told reporters that high prices, including gasoline, were the main factors behind the sentiment index's result. The government said the economy is recovering moderately. Looking ahead, a moderate economic recovery is likely to continue, “although there is concern over the impact of high prices.”