MNI POLICY: Japan Watchers Survey To Offer BOJ Consumer Update

The August Economy Watchers outlook index will offer officials at the Bank of Japan an up-to-date look at consumer demand across the economy, with hopes that the numbers will show some resilience, as the survey was conducted in the last week of August, after the recent surge in Covid-19 infections peaked.

BOJ officials, already seeing a fairly solid recovery in both exports and industrial production, are now focusing on labour market conditions and overall consumer spending to gauge the overall strength of the snapback and a weaker-than-expected Watchers survey could their dent hopes of an early bounce, MNI understands.

Consumer demand for goods recovered quickly as restrictions ended, helped by pent-up demand and increased disposable income for some benefiting from government stimulus schemes. However, demand for services particularly across the hospitality sector, remains weak as much of the population continues with a degree of social distancing, something the BOJ sees continuing for a while yet.

This is a concern for the central bank, as a broad recovery is needed in overall private consumption that accounts for 60% of Japan's GDP to maintain current momentum.

The July Watchers outlook index for two to three months ahead showed a first drop in three months, down 8.0 points to 36.0 after rising 7.5 points to 44.0 in June. The current climate index rose 2.3 points to 41.1 in July a seasonally adjusted basis, after rising 23.3 points to 38.8 in June.

The survey, due Sept 8 at 0500GMT, indicates whether respondents with jobs most sensitive to economic conditions -- 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.

Restaurants and retailers have been among the hardest-hit businesses in the poll, which targeted roughly 2,000 people, including store managers and taxi drivers.