Economy Watchers in Japan become Less Negative

The Economy Watchers Survey shows a less negative attitude toward current and future economic conditions in Japan.

The Economy Watchers Survey is a regional survey of some 2050 individuals actively engaged in various aspects of the economy. They are asked to quantify their opinions on the current and future state of the economy--assign a value of 1, if conditions are better; .75, if rather better; .50, if no change; .25, if rather worse and 0, if worse. A diffusion index is then calculated by multiplying the percentage of respondents to each answer by the point assigned to it. A value of 50 would indicate that those who think things are better or rather better are equal to those who think things are rather worse or worse. A value above 50 indicates an excess of optimists over pessimists, while a value below 50 indicates an excess of pessimists.

The economy watchers raised their appraisal of current conditions in the economy for a second month in February to 45.6 from 45.0 in January. Except for a rise in July, they had steadily reduced their appraisal from May to December, 2004. As for the future, the economy watchers became less negative last December and have increased their appraisal of future conditions in January and February. The February index rose from 48.3 January to 49.9 just barely below the 50.0 level where those with a positive outlook just match those with a negative outlook. Although both the appraisal of current conditions and that of the future are still below year ago levels, the recent turn around in the trends of the appraisals, shown in the attached chart, is encouraging.