Japan’s consumer confidence shows slight recovery in March

April 20, 2008
By Ken Worsley

After five straight months of falling consumer confidence, and numbers at nearly a five-year low in February, March consumer confidence figures showed a slight recovery, according to the Cabinet Office. After having dropped to 36.1 in February, we saw consumer confidence at 36.7 in March, which is still below the score of 37.5 that was registered in January.

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 March’s figures, with the change from last month:

Consumer Confidence Index: 36.7 (+0.6)
Overall Livelihood: 34.4 (+0.7)
Income Growth: 38.7 (–0.2)
Employment: 37.6 (+0.6)
Willingness to buy durable goods: 36.2 (+1.4)

Four of the five category scores rose in March, with “Income Growth” being the only score to continue its decline. “Willingness to buy durable goods” showed the strongest increase, though that score has been very low since about November. In March 2007, “Willingness to buy durable goods” scored at 48.9 - and that was the month in which we saw it drop below the 50 point line.

Although it is good to see consumer confidence stop falling, this cannot be seen as a strong recovery, and does not seem indicative of a more optimistic view for consumers, at least not yet. It was hard to imagine the numbers getting much lower than they were in February.

The Cabinet Office also said that 85.7 percent of those surveyed believed that prices would rise over the coming year. Although this is lower than the record high of 86.5% in February, it still reflects the fact that prices are indeed rising and that consumers don’t yet see any reprieve from such conditions. Combined with the worsening expectations for wage growth, this leaves little room to be optimistic about consumer spending over the coming months.

Filed Under Consumer Confidence Index, Economic Reports