Japanese Merchants’ Mood Improves to Least Gloomy Since Tax Hike
Japanese Merchants’ Mood Improves to Least Gloomy Since Tax Hike
(Bloomberg) -- The mood among Japanese merchants improved in August to the least gloomy since last year’s sales tax as pessimism over the pandemic eased.
A gauge of current sentiment among store managers, barbers, taxi drivers and others who deal directly with consumers climbed to 43.9, the highest since last September immediately before the Oct. 1 tax hike, the Cabinet Office’s Economy Watchers survey showed Tuesday.
The index has risen for four straight months after bottoming in April, during the worst of the virus shutdowns. The tax hike came at the start of a three-quarter slump that culminated in the record economic contraction of the second quarter. The survey was conducted from Aug. 25 to Aug. 31.
A separate index measuring the outlook also increased to 42.4, regaining most of the ground lost in July when a resurgence of infections took off. The spread has eased in recent weeks.
Even with the gains, both indexes remain well below 50, indicating that pessimists still outnumber optimists.
A separate report showed monthly bankruptcies were still slightly below last year levels, indicating that government and Bank of Japan loan programs are working to keep firms afloat, a factor that could be supporting sentiment among merchants.
Japan’s economy shrank by 28.1% last quarter, highlighting the enormous challenge facing the country as the ruling party kicks off its campaign to pick a new prime minister after Shinzo Abe’s shock move to step down. It isn’t clear how many responses were made before the resignation announcement.
Analysts see GDP rebounding this quarter, but not enough to make up for the lost output since last year. The pace of recovery is still largely dependent on the path of the virus.
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