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Economy Watchers Survey down in June, to lowest level since 2001

After having seen a slight recovery in March, the monthly Economy Watchers Survey declined 1.4 points to to 35.5 in April, and then 3.4 points to 32.1 in May. According to the Cabinet Office, that figure fell 2.6 points further to 29.5 in June. This survey measures sentiment among workers who are particularly sensitive to economic trends, including taxi drivers, hotel staff and restaurant workers.

The Economy Watchers survey is measured as an index with a score above 50 indicating a positive view of the economy and a score below 50 representing a pessimistic overall view. It has now clocked in below the 50 mark for 15 consecutive months. June’s 29.5 is the lowest score seen since 27.2 was registered back in October of 2001, and it was the first time the index slipped below 30 since November of that year.

All subindexes of the survey showed a decline, with the services sector showing the strongest downward pressure, by 4.6 points to 30.3. Food and dining related workers reported the lowest score, at 26.8. Read more

Economy Watchers Index down in April; Restaurants to hike prices

After having seen a slight recovery in March, the Cabinet Office announced on Monday that its monthly Economy Watchers Survey had seen a decline from 36.9 in March to 35.5 in April. This survey measures sentiment among workers who are particularly sensitive to economic trends, including taxi drivers, hotel staff and restaurant workers.

The Economy Watchers survey is measured as an index with a score above 50 indicating a positive view of the economy and a score below 50 representing a pessimistic overall view. Although April’s 35.5 score is below what was seen in March, it is slightly better than the scores registered in February (33.6) and January (31.8), when the survey hit its lowest level since December 2001. April 2008 was the 13th consecutive month with a score below 50.

One worrying sign is that the survey’s employment subindex dropped from 35.5 in March to 33.6 in April, which is its lowest level since February 2002.

In related news, a recent Nikkei survey found that 58% of restaurant operators plan to raise their prices in fiscal 2008. This would be an increase from the estimated 53% that raised prices in FY2007.

If that news has you down, 12% of pub and bar restaurants said that they intend to cut prices in FY2008.

Economy Watchers Index dropped 4.8 points in January, at lowest point since December 2001

Each month, the Cabinet Office releases its Economy Watchers Index, a survey measuring sentiment among workers who are particularly sensitive to economic trends. This group includes taxi drivers, hotel staff and restaurant workers. January’s data was released late last week, and the results showed a decline in confidence amongst such workers for the tenth consecutive month.

The Economy Watchers survey is measured as an index with a score above 50 indicating a positive view of the economy and a score below 50 representing a pessimistic overall view. In December, the index stood at 36.6, after having been at 38.8 in November. Although those months saw worryingly large falls of 2.7 and 2.2 points, January’s score dove 4.8 points to 31.8.

As can be seen from the chart, the current downtrend is quite strong. Although January’s results are the lowest seen since December 2001, they remain above the lowest score seen since the survey has been done in its current form, which was the 27.2 that was registered in October 2001 (actually, September-November 2001 were the only three months in which the index dropped below 30).

The Cabinet Office lays things out starkly in its assessment, simply stating that the prices of many daily products are increasing and income is not, and thus consumers are more reluctant to spend in the current environment. Of course, the report mentions higher fuel and energy costs.

Now the question is whether February’s data will show a drop under the 30 point line. I doubt that anyone in Vegas is putting odds on it, but it would be hard to bet against it, especially as the Outlook Index fell yet again, from 37.0 to 35.8 points. On top of that, wages fell an average of 2.7% in December 2007, for their largest fall in three years.

What could this mean in terms of policy? As Edward Hugh points out at Japan Economy Watch:

In the face of the evidence people are now beginning to adjust their positions. Bank of Japan Governor Toshihiko Fukui said today the cycle of profits feeding into wages and consumption that he had consistently argued had supported what has been on some measures Japan’s longest postwar expansion is now “temporarily weakening”, of course we are about to see how long “temporarily” actually means, since on many measures earnings and consumption have never been strong during the expansion phase, so what they will look like during the contraction one is anyone’s guess.

Hopefully any weakening is indeed temporary. As Edward points out, many measures on earnings and consumption never looked like a strong recovery on paper. We have to start wondering how badly such conditions could hurt profits at Japanese firms in 2008, and how that might affect those firms looking for capital to fund overseas expansion.

Cabinet Office: Economy Watchers Index Down for Eighth Consecutive Month

Each month, the Cabinet Office releases its Economy Watchers Index, a survey measuring sentiment among workers who are particularly sensitive to economic trends. This group includes taxi drivers, hotel staff and restaurant workers. November’s data was released today, and the survey is showing a decline in confidence amongst these workers for the eighth consecutive month.

The actual index score fell by 2.7 points to 38.8 in November. A score below 50 indicates pessimism, while one above 50 indicates optimism regarding current economic conditions. November’s score is the lowest registered since the index hit 38.4 in May 2003.

Although we’re not yet seeing anything resembling the depths of late 2001, when the index slipped into the high 20s, the downward trend looks firmly established and there is worry that higher oil, gasoline and food prices will make things more difficult for this group of workers to feel confident about economic conditions for some time yet. Read more

Cabinet Office: Economy Watchers Index Down for Sixth Consecutive Month

Each month, the Cabinet Office publishes its Economy Watchers Index, which is the result of surveys of workers whose positions are highly sensitive to current economic conditions, such as taxi and truck drivers, sales staff at department stores, restaurant owners, and operators of other retail shops.

The final score for this month’s survey fell 1.2 points, to 42.9. This was the sixth consecutive month that the score was down. A figure below 50 means that pessimists outnumber the optimists in terms of economic conditions. The survey takes into account the opinions of 2,000 workers, who are asked to compare their perception of the economy now against three months ago.

Despite recent statistics showing that retail sales were on the increase in August, the retail subindex fell 2.2 points to 40.4. The largest move down, however, was seen amongst those workers in the dining and drinking industries. That subindex fell 7 points, to land at 36.3, the lowest score in the index. In April, that category stood at 48.8.

Economic Reports Roundup: Economy Watchers, Index of Business Conditions, Corporate Services Price Index, and US Car Sales

On Wednesday, the Cabinet Office announced the results of the July Economy Watcher’s Survey. The final score for the survey fell 1.3 points, to 44.7. This was the fourth consecutive month that the score was down. A figure below 50 means that pessimists outnumber the optimists in terms of economic conditions. This survey focuses on workers whose positions are highly sensitive to current economic conditions, such as taxi and truck drivers, sales staff at department stores, restaurant owners, and operators of other retail shops.

Released on Monday, the Index of Business Conditions Report for June (also from the Cabinet Office) showed increases in the Leading and Coincident Diffusion Indexes, but a sharp decrease in the Lagging Index. The Leading Index, which measures sentiment for the future, was up from 40.9 in May to 80.0 in June. The Coincident Index rose from 60 in May to 77.8 in June.

The Lagging Index, however, took a dive from 100 in May to 50.0 in June. According to the Cabinet Office, figures for industrial goods shipments were at record highs. The index for sales by small and midsize firms reached its highest figure when measuring from the beginning of the current cycle of economic expansion (February 2002).

In June, machinery orders were down 10.4% against June of last year. Machine tool orders, however, were up 18.2%, according to the Japan Machine Tool Builders Association.

On Friday, the Bank of Japan announced that wholesale prices were at their highest in nine years in July. The corporate services price index rose 2.1% in July, and showed upward movement for the 41st consecutive month. Petroleum and coal products saw price rises of 2.7% versus July of last year.

Finally, US auto sales hit their lowest total in nine years in June, which is sure to make exporters nervous. However, Japanese automakers are getting a bigger slice of the pie;the market share of Detroit’s big three automakers fell below 50% for the first time ever.

Cabinet Office: March Economy Watcher’s Index

The Cabinet Office released its Economy Watcher’s Index for March, and the results are optimistic - for the first time in six months. The index, which attempts to measure the strength of domestic demand by surveying approximately 2,000 workers who deal closely with the nation’s customers, climbed to 50.8 points from February’s score of 49.2.

It seems that consumer spending, which accounts for just over half of Japan’s economy, may finally be picking up. On March 30, the Ministry of Internal Affairs and Communications announced that February 2007 household spending in Japan increased by 1.3% compared to February 2006, reaching an average 272,763 yen per household - a figure higher than most economists anticipated. At the same time, sales at Japan’s large shops were up 0.5% year-on-year in February.

Back to the Economy Watcher’s Index. What interests me about the data is that it shows displays of optimism amongst the service and retail industries, yet that optimism has decreased since last month’s report. Manufacturing demonstrates the same pessimism amongst large manufacturers that last week’s Tankan survey revealed.　By industry, the pessimists and optimists broke down as such:

Optimistic about the future:

• Home builders
• Service industries
• Retail
• Food and Drink

All four of the above industries showed a decrease in optimism about the future from last month; all four are connected to consumer spending.

Pessimistic about the future:

• Manufacturers
• Non-manufacturing business

Both of these showed a decrease in optimism about the future from last month; both are connected to capital spending.

Overall, the index’s future outlook portion fell from 52.1 in February to 51.3 in March.

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