Japan's service sector sentiment improves slightly in April from 2-year low

08:55, May 13, 2011      

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Sentiment in Japan's service sector improved in April following a two-year low logged the previous month, the Cabinet Office said Thursday in its monthly "Economy Watchers" survey.

The current conditions index rose to 28.3 in April from a two-year low of 27.7 in March and the Cabinet Office said the moderate gain was due to consumer sentiment picking up after a period of restraint shown after the March 11 earthquake and tsunami.

The forward-looking index, which gauges conditions two to three months ahead, improved to 38.4 from 26.6 in the previous month, indicating the "watchers" feelings about upcoming conditions, are somewhat optimistic as concerns about the economic impact of the March 11 disasters begin to recede and service industries like shops' patronage, travel and tourism, restaurants, hotels and lifestyle facilities like clubs and gymnasiums, will likely start to see increased trade.

The government survey did reveal, however, that business sentiment was still low in the recording period, as supply chain disruptions and the continued increasing costs of commodities and resources dampened sentiment.

The Economy Watchers survey asks business-cycle sensitive workers their thoughts on existing and future economic conditions, to provide the government with a detailed picture of economic trends in Japan.

Segments of the economy surveyed include sectors such as retail, restaurant service, and taxi driving and the monthly report serves as both a consumer confidence indicator and a leading indicator for the rest of the economy.

The rise in April's survey was due to more people seeing business conditions as "getting better," or "moderately improving" and less people saying things are getting "worse" or "slightly worse."

The monthly government survey is gauged by a score above 50 meaning those "watchers" surveyed, including the likes of shop clerks, hotel managers and taxi drivers, have an optimistic feeling about business conditions and a score below 50 means the opposite.

However based on the results of April's survey the government said "the economy is in a severe condition due to the fallout from the disaster." The previous assessment was that due to the earthquake and tsunami the state of the economy had "rapidly declined."

The outcome of the monthly survey is followed closely by the Bank of Japan as it reflects retail sector sentiment more precisely than some other government data.

Source: Xinhua
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