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April’s Consumer Confidence Index: Less Pessimistic

It’s mid-month again, and that means time for April’s Consumer Confidence Index report from Japan’s Cabinet Office. You may remember that in March’s report we had seen a moderate pullback in the overall consumer confidence score, with declines in each of the other four categories as well.

The report generates five total scores: The Consumer Confidence Index, Overall livelihood, Income Growth, Employment, and Willingness to buy durable goods. A score above 50 indicates positive public sentiment on that index. A number below 50 indicates negative sentiment.

April’s survey was carried out on April 15, 2007, and covered 6,720 households (households with two or more people numbered 5,040, and single-person households totaled 1,680).

The good news is that all five scores rose in April. Employment remains the only score over 50 (at 51.7), but the Willingness to buy durable goods score inched closer to positive territory, moving up 0.5 points to 49.4.

Broken down by categories (change from previous month):

• Overall score: 47.4 (+0.6)
• Overall Livelihood: 44.9 (+1.0)
• Income Growth: 43.6 (+0.7)
• Employment: 51.7 (+0.3)
• Willingness to buy durable goods: 49.4 (+0.5)

The last time all five scores moved up at the same time was in January 2007. All five of April’s scores were below their Jaunary counterparts.

Bloomberg published this interesting morsel:

Bank of Japan Governor Toshihiko Fukui last week said job security has convinced shoppers to loosen their purse strings, even as wages barely increase. Consumers, whose spending makes up more than half of the economy, probably led growth last quarter as business investment slowed.

“Consumers started the year in the mood to spend,” said Julian Jessop, chief international economist at Capital Economics Ltd. in London. “Growth in the industrial sector has clearly peaked and the big question now is whether consumer demand will pick up enough to offset that. I think it will.”

True, household spending picked up a bit in February and March. But without wage increases, that pickup may have a ceiling. And if exports slow, as Bloomberg has also predicted, that ceiling may get a shade lower. Although the average summer bonus will hit an all-time high this year, a smaller slice of the working pie is eligible for bonuses.

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