MNI DATA ANALYSIS: Cold Weather Keeps Japan Sentiment Down

By Max Sato

     TOKYO (MNI) - Freezing temperatures across Japan, combined with rising

costs and a stock market slump, continued to dampen sentiment in various

sectors, a key government survey conducted from Feb. 25 to Feb. 28 and released

Thursday showed.

     The Economy Watchers Survey sentiment index for Japan's current economic

climate, which is closely monitored by government and central bank policymakers,

fell 1.3 points to a 10-month low of 48.6 in February on a seasonally adjusted

basis after slumping 4.0 points to 49.9 in January.

     It was the third straight month-on-month drop in confidence, which was also

dampened by labor shortages, rising raw materials costs and a scarce supply of

parts. Supermarket managers also reported that consumers were frugal as fresh

vegetable prices remained high after surging late last year.

     --WEATHER AND OLYMPICS

     "The cold weather across Japan hurt the retail sector. The PyeongChang

Olympics were also blamed for keeping shoppers away as people stayed home to

watch the games, although discount retail store chains reported solid demand for

consumer electronics," Shigeru Hirota, Cabinet Office director of regional

economies, told reporters.

     "Looking ahead, the unstable stock prices weighed on sentiment as they are

feared to prompt wealthy consumers to cut spending on high-end goods."

     The Economy Watchers outlook index showed sentiment about the situation two

to three months ahead marked the fourth straight month-on-month decline, down

1.0 point at a five-month low of 51.4 after falling 0.3 point to 52.4 in

January.

     Among a few bright spots, travel agencies saw a year-on-year rise in the

reservations for domestic tours during the Golden Week holidays from late April

to early May as well as overseas trips in the summer.

     --GOVT KEEP VIEW

     The Cabinet Office maintained its view after slightly downgraded its

overall economic assessment based on the Economy Watchers Survey last month,

saying, "While marking time on weather factors, the gradual recovery trend

continues."

     "Looking ahead, there remain expectations for orders and business

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

the Cabinet Office said, maintaining its recent outlook.

     --CONSUMER CONFIDENCE FLAT

     Data released last week showed the key index in the Consumer Confidence

Survey slipped 0.4 point to 44.3 in February form 44.7 in January on a

seasonally adjusted basis, posting the first month-on-month drop in two months,

as the global stock market sell-off made people more cautious about the economic

outlook.

     The level of the index is still fairly high after hitting a four-year high

of 44.9 in November but the results of the survey prompted the government to

downgrade its view for the second straight month, saying, "Consumer confidence

is marking time."

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

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