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February Consumer Confidence down to nearly five year lows

March 14, 2008
By Ken Worsley


On Wednesday, the Cabinet Office released it’s Consumer Confidence Index data for February 2008, and we continue to see a downward trend in the figures. After January’s score tumbled to 37.5, February’s index showed a further fall to 36.1 points.

The Consumer Confidence Index generates five scores, each of which is considered positive when above 50, and pessimistic when below the 50 mark. Here’s a breakdown for February’s figures, with the change from last month:

  • Consumer Confidence Index: 36.1 (-1.4)
  • Overall Livelihood: 33.7 (-1.4)
  • Income Growth: 38.9 (–0.5)
  • Employment: 37.0 (-1.6)
  • Willingness to buy durable goods: 34.8 (-1.9)

The first thing to note is that all five scores dropped in February. This last happened in December of 2007, as January 2008 had seen a rise in the “Overall Livelihood” category. In February, the “Overall Livelihood” score fell to its lowest level ever. Ever.

We think it’s worth taking a look at February 2008 data when compared to February 2007:

  • Consumer Confidence Index: -12.3
  • Overall Livelihood: -12
  • Income Growth: -6
  • Employment: -15.7
  • Willingness to buy durable goods: -15.3

These figures show a very strong change in sentiment compared to a year ago, and it’s worth noting that 2007 figures “peaked” in May, which means if the current trend continues, we expect to see further divergence in the year-on-year comparison. We should also keep in mind that the drop in the overall Consumer Confidence score is the largest ever seen on a year-on-year comparison basis.

The February score for “Willingness to buy durable goods” was the second-lowest seen since 1982, when the survey was begun in its current form. In March 1997, this category hit 31.4, and in February of 2007 it stood at 50.1. Last February, “Employment” was also above 50, at 52.7.

The overall Consumer Confidence has not been so low since March of 2003, when it dipped to 34.7 points. In it’s report, the Cabinet Office said that consumer sentiment is deteriorating. The survey also stated that 86.5% of households believe that prices will rise in the coming year. That figure was up for the fifth month in a row.

We keep hoping that Consumer Confidence will soon bottom out, though the conditions necessary for that to happen simply do not exist. This site was born from the belief that Japan’s economic recovery was false from the domestic worker and consumer’s point of view, and that good times were not extending to households. Data is only continuing to unfortunately prove us right…and a new Bank of Japan Governor won’t do much to change that.

Filed Under Cabinet Office, Consumer Confidence Index, Economic Reports, Economics 

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One Response to “February Consumer Confidence down to nearly five year lows”

  1. Is a Nikkei 225 Bottom Near? | Investing in Japan on March 16th, 2008 9:47 am

    […] With the yen now at a 12-year high against the dollar and all the renewed media interest on both sides of the Pacific on the perceived implications for equities (self-fulfilling for struggling Japanese stocks), in addition to further cuts expected at the FOMC’s rate decision meeting on Tuesday, the yen seemingly has more near-term upside. That said, empirical evidence suggests rising capitulation among individual equity investors, which in turn may indicate a bottom is near. Then again, the 25-day moving average of advancers vs. decliners at 81%, is low by rule-of-thumb measure, but far from the unprecedented 60%-levels registered last summer. There’s also the uncertainty of who will head the Bank of Japan. If you want to get overly bearish, keep talking about subprime-related pressures, while keeping in mind the deteriorating plight of consumers. […]

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