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Japan consumer confidence index drops to fresh all-time low in December

Earlier today, the Cabinet Office released consumer confidence index figures for December, and the index dropped 2.2 points to 26.2, marking the third consecutive month that consumer confidence has hit an all-time low.

Japan’s consumer confidence index thus set record lows for six of the twelve months in 2008 – from June to August and from October to December.

The consumer confidence index itself contains five scores, each of which is considered positive when above 50, and pessimistic when below the 50 mark. Here’s a breakdown for December figures, with the change from the previous month:

• Consumer Confidence Index: 26.2 (-2.2)
• Overall Livelihood: 28.5 (-0.9)
• Income Growth: 31.5 (-1.9)
• Employment: 15.4 (-5.7)
• Willingness to buy durable goods: 29.4 (-0.2)

Of grave concern is the figure for employment, which has nosedived over the past few months, and in December plunged below its previous record low of 19.7 points from back in December 1993. A year ago, the employment score stood at 40.6, and it was last above the 50 point mark in May 2007, at 51.2 points.

It is also notable that a decline was seen in all five figures in December, as we had seen in October (in November the “Willingness to buy durable goods” category increased by 0.8 points).

Last month I assumed that a further fall in the employment category was to come as news of layoffs was just hitting the media cycle as November figures were released. That news has hardly abated, and job cuts have deepened further with seemingly no light at the end of the tunnel.

While these figures speak for themselves, it is also worth noting what the government itself has to say about the situation. With record drops in production and exports as a backdrop to the consumer confidence index figures, the Cabinet Office described economic conditions as “rapidly worsening” in the January edition of its monthly economic report, which was also released today. The term “rapidly worsening” has never been used so long as this report has been published, going back to 1975.

Those 12,000 yen “stimulus” handouts seem increasingly more unlikely to do anything to help improve the sagging popularity of Prime Minister Taro Aso any time soon.

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