MNI BRIEF: Japan June Sentiment Index Sees 1st Drop in 5 Mos

Japan's sentiment index posted a first drop in five months in June, with the outlook index for two to three months ahead seeing as econd straight drop, the latest Economy Watchers survey released by the Cabinet Office Monday showed, but the government left its overall assessment unchanged.

The fall in sentiment could undermine the Bank of Japan’s view that private consumption should continue rising despite the cost-of-living impact Bank officials see low-income households are holding back on spending amid high prices, with some households shifting spending to cheaper goods.

The Economy Watchers sentiment index for the current economic climate fell a seasonally-adjusted 1.4 points to 53.6 in June from 55.0 in May. The outlook index for two to three months ahead fell 1.6 points to 52.8 in June from 54.4 in May, for the second straight drop.

The government said, “The economy is recovering moderately. Looking ahead, there is hope for a continuous moderate recovery, although the pace of improvement slowed.” An official at the Cabinet Office said the index fell from the previous month but it stayed above 50, meaning a moderate economic recovery continued.