Japanese Merchants’ Mood Returns to Least Gloomy Since 2018

(Bloomberg) -- The mood among Japanese merchants improved in September to the least pessimistic in almost two-and-a-half years, adding to signs that a recovery is taking root in the economy following a virus-induced slump.

A gauge of current sentiment among store managers, barbers, taxi drivers and others who deal directly with consumers climbed to 49.3, the highest since April 2018, the Cabinet Office’s Economy Watchers survey showed Thursday. The current index has improved for five straight months after bottoming in April, during the worst of the virus emergency.

A separate index measuring the outlook also increased to 48.3, the highest since February 2019. Readings below 50 indicate that pessimists outnumber optimists.

The improving sentiment bodes well for new Prime Minister Yoshihide Suga as he tries to ensure an economic recovery with stimulus measures following a 28% record contraction in the second quarter.

Analysts see a double-digit rebound in economic growth in the July-to-September period, but expect the pace of recovery to slow down in the future.

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