Japan’s October consumer confidence dives to lowest level since March 2004

November 12, 2007
By Ken Worsley

In August, we saw Japan’s consumer confidence index slip to a 32 month low, when it stood at 44.0 points. In September, the index was pushed up slightly, to 44.1, and we attributed that increase to a boost in the score concerning the “Willingness to buy durable goods.”

Although we expected October to decline again, the results are worse than expected. Today, the Cabinet Office announced results for October’s consumer confidence survey, and the score has dropped to 42.8. This is lowest score seen since 42.7 was registered in March 2004.

A score above 50 indicates that optimists outnumber pessimists. The survey has not hit the 50 point level since April 2006, and has not been above the 50 point level since the second quarter of 1990, when it was at 50.3.

The report generates five total scores: The Consumer Confidence Index, Overall livelihood, Income Growth, Employment, and Willingness to buy durable goods. The breakdown of those scores for October was as follows:

Consumer Confidence Index: 42.8 (-1.3)
Overall Livelihood: 41.0 (-1.2)
Income Growth: 42.2 (–0.2)
Employment: 45.3 (-1.1)
Willingness to buy durable goods: 42.8 (-2.7)

The decline was led by a huge drop in the “Willingness to buy durable goods” category, which fell 2.7 points. As we pointed out last month, this score tends to fluctuate wildly and see the largest jumps from month to month.

What we’re seeing now is some of the scores getting dangerously close to breaking below 40 and ending up in the high 30s, which has not been seen since December 2003, when the overall score stood at 39.2.

Filed Under Cabinet Office, Consumer Confidence Index, Economic Reports