MNI BRIEF: Japan Jan Sentiment Dips But Outlook Index Rises

Japan's economic sentiment index posted a third straight drop in January but the outlook index posted a second straight rise, prompting the government to largely maintain its assessment from the previous month, the Economy Watchers released by the Cabinet Office Wednesday showed.

The Economy Watchers sentiment index for the current economic climate fell a seasonally adjusted 0.2 points to 48.5 in January from 48.7 in December. “The economy showed sign of recovering. Looking ahead, there is hope for a recovery, although there are concerns over the impact of high prices,” the government said. The outlook index for two to three months ahead rose 2.5 points to 49.3 in January from 46.8 in December.

The rise in the outlook index supported the Bank of Japan view that private consumption is expected to come under downward pressure from a slide in real incomes due to price rise, though it is still likely to continue increasing. Bank officials continue to pay attention to the risk that private consumption will weaken on the back of ongoing high living costs and consumers will cut spending.

The survey indicates whether respondents with jobs most sensitive to economic conditions, including taxi and truck drivers, department-store sales staff and restaurant and shop owners, think economic conditions have improved or worsened over the last three months. It was conducted by the Cabinet Office between January 25 and January 31 when the government didn’t implement quasi-measures to restrict economic activity and inbound tourism resumed. The survey targeted roughly 2,000 people, including store managers and taxi drivers.