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Japan’s consumer confidence rises for sixth straight month in June

July 13, 2009
By Ken Worsley


After bottoming out at 26.2 in December, Japan’s Consumer Confidence Index has slowly been creeping upward over the past six months. According to data released by the Cabinet Office today, the Consumer Confidence Index reached 37.6 points in June, up from 35.7 in May. This is the highest reading seen since December 2008, and the index has now risen for six straight months.

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 June figures, with the change from the previous month:

  • Consumer Confidence Index: 37.6 (+0.9)
  • Overall Livelihood: 37.4 (+1.1)
  • Income Growth: 35.8 (+0.5)
  • Employment: 31.7 (+3.7)
  • Willingness to buy durable goods: 45.5 (+2.4)

Media sources have attributed the pickup in consumer confidence in part to government stimulus efforts, which may help explain why the “Income Growth” category continues to rise despite the fact that wages continue to fall on the average. The score for income growth, however, has risen much less than the others over the past few months. The employment index, to take but one example, sunk to an abysmal 14.2 points in January before climbing to the 31.7 seen last month.

Of course, despite the rise seen over the past six months, the Consumer Confidence Index remains well in the pessimistic range. The only score above 40 is willingness to buy durable goods, and this figure would be boosted the most by the government’s cash handouts to households - though an extra 12,000 yen per person may not go far towards purchasing many durable goods in most households.

Downward pressure on consumer confidence still exists. Cash handouts will either be saved or spent away soon, and Keidanren claims that average summer bonuses will be down 18.3% from last year.

Filed Under Cabinet Office, Consumer Confidence Index, Economic Reports 

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Comments

One Response to “Japan’s consumer confidence rises for sixth straight month in June”

  1. Matt on July 14th, 2009 11:05 am

    If someone were to regress certain data series on the consumer confidence series, I wonder which of the following would create a model with the strongest coefficient of determination:
    1. Equity gains
    2. GDP growth
    3. Temperature growth

    :D
    I think 1., followed by 3., then 2.

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