Consumer confidence index inches up in January

February 14, 2010
By Ken Worsley

According to data released Friday by the Cabinet Office, Japan’s Consumer Confidence Index rose to 39.0 in January, up from 37.6 in in December. January’s rise, however, did not make up for the drop seen in December, as the index remained below the 39.5 level seen in November 2009.

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 January figures, with the change from the previous month:

Consumer Confidence Index: 39.0 (+1.4)
Overall Livelihood: 39.8 (+1.6)
Income Growth: 37.9 (+1.8)
Employment: 33.1 (+0.5)
Willingness to buy durable goods: 45.3 (+0.2)

January was the first month since June 2009 that all five scores showed an increase.

While these numbers are still far from the break-even point of 50, it’s worth seeing how they compare to the same month a year ago.

In January 2009, the overall Consumer Confidence Index stood at 26.4, 12.6 points lower than last month. Overall livelihood was 10.6 points lower, at 29.2. Income growth increased 6.5 points from 31.4 a year ago.

One thing that has not changed is that employment remains the lowest score. In January 2009 it hit a record low of 14.2 points, and has recovered by 18.9 points. Willingness to by durable goods has also shown a healthy increase over the past year, up 14.7 points since a year ago.

The numbers are also slightly higher than January 2008, though they lag well behind the figures seen in the same month going back to 2004 (using March 2004, as there was no report in January 2004).

Government and media comments on the report have generally attributed January’s rise to government stimulus spending. In other words, increases in sentiment are not sustainable unless stimulus measures actually have the effect of kick-starting consumer spending, hiring and wage increases. This seems highly unlikely; what government and media sources leave out is the fact that during the previous economic boom Japanese firms posted record profits year after year while wages never significantly rose, but rather held nearly flat during that period.

Filed Under Cabinet Office, Consumer Confidence Index, Economic Reports