The government's drive to raise the consumption tax rate and aggressive energy-saving measures combined to put a chill on economic sentiment in Japan.
The Economy Watchers Survey, released by the Cabinet Office on July 9, reported a dip in business confidence regarding the current economy and the outlook in coming months.
In June, the diffusion index of business confidence in the current economy sank 3.4 points to 43.8, marking the third straight monthly drop. Confidence in the economy two to three months down the road fell 2.4 points from May to 45.7 in June.
The index for the months ahead was below the boom-or-bust line of 50 for the second straight month.
The Cabinet Office surveyed 2,050 workers, including small business owners and taxi drivers, between June 25 and 30, with 90.8 percent responding.
The sagging numbers show a growing uncertainty about the future, eclipsing the hopes that a reconstruction boom would follow last year’s Great East Japan Earthquake.
One apparel retailer surveyed cited a number of factors that would dampen consumer spending, specifically the planned hike in the consumption tax rate. Businesses also said they expect the government’s power-saving measures to pull the reins in on production during the summer months.
Natural forces played a part in the gloomy business confidence in June as well, with respondents blaming a recent typhoon and other inclement weather for a decline in sales of products such as beverages and clothing.
The Cabinet Office revised downward its overall assessment of the current economy for the second month in a row. It said the economy had been picking up slowly, but has recently shown “weak movements.”
In a report released last month, the office said the economy was at a moderate pace of recovery.
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