MNI BRIEF: Japan May Sentiment Index Drops; Clouds  Spending

Sentiment amongst Japan's economy watchers fell for a thrid consecutive month in May, data released by the Cabinet Office showed Monday, with all the sub-indexes linked to households, businesses and the labor market fell.

An official at the Cabinet Office told reporters that the number of respondents who voiced concern over the impact of the weak yen rose -- a view that in part undermines the Bank of Japan’s view that private consumption is resilient and the consumption will not derail from a recovery trend. (see MNI POLICY: Weak Yen Boosts Probability Of July BOJ Rate Hike)

The Economy Watchers sentiment index for the current economic climate stood a seasonally adjusted at 45.7 in May (47.4 in April), the lowest level since August 2022 when it was at 45.5. The outlook index for two to three months ahead fell 2.2 points to 46.3 in May from 48.5 in April, for the lowest level since July 2022 when it was at 42.6.