Consumer confidence up for first time in five months in Japan

Consumer confidence edged up for the first time in five months in May as coronavirus infections fell enough to end the nationwide state of emergency, the government said Friday.

The seasonally adjusted sentiment index for households of two or more people stood at 24, up from the all-time low of 21.6 set in April, according to the Cabinet Office.

The figure, however, is the second-lowest since April 2004, when the survey went monthly, and lower than the 27.5 posted in January 2009 during the global financial crisis.

The index gives an indication of consumers’ economic expectations for the coming six months, with a reading below 50 suggesting pessimists outnumber optimists.

The emergency declaration, which was choking the economy, was lifted in most prefectures earlier this month after the pace of infections abated. It was lifted completely on Monday, when emergency measures were called off for greater Tokyo and Hokkaido.

The survey between May 8 and 20 covered 8,400 households, including 1,902 single-member households, and drew valid responses from 6,847, or 81.5 percent.

A government official told reporters that the end of the emergency likely influenced this month’s reading.

The Cabinet Office upgraded its basic assessment, saying consumer sentiment has “remained in an extremely severe situation, but appeared to be bottoming out.”

In April it said sentiment was “rapidly worsening,” the most pessimistic expression the government has ever used.

“We saw significant drops in the figures for March and April, but the current situation seems a bit different from then, so we changed the assessment,” the official said.

Among the survey’s four components, consumers’ assessment of livelihoods rose 3.1 points to 25 and their assessments of income growth grew 1.5 points to 27.8, both up for the first time in five months. Assessments of employment conditions climbed 1.8 points to 16.8 for the first rise in four months.

Consumers’ readiness to buy durable goods rose 3.0 points to 26.3.

In the survey, 72.3 percent of households said they expect prices to rise in the year ahead, compared with 70.7 percent in April, and 11.1 percent said they expect prices to fall, up from 10.8 percent the previous month. Another 11.1 percent answered “unchanged,” down from 11.4 percent.

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