Japanese Economy Watchers Still in the Doldrums

In its Economy Watchers Survey the Cabinet Office in Japan surveys some 2050 individuals whose business activity is sensitive to developments that affect households, corporations and employment. Among the economy watchers are managers and clerks at super markets, restaurant employees, taxi drivers, beauty parlor operators and barbers, managers and employees in manufacturing and service industries, staffs of employment agencies and temporary manpower companies.

The economy watchers reported a further deterioration in August in their already depressed appraisal of current conditions for the total economy. The diffusion index was 28.3 compared with 29.3 in July and the fifth consecutive decline since March. There was, however, a slight improvement in their pessimistic expectations for the future as that diffusion index rose to 32.0 from 30.8 in July. Both indexes are well below levels reached a year ago. The current condition index is down 44.1% and the future condition index, 46.5%. Recent levels of both indexes have not been seen since the recession of the early nineties as shown in the first chart.

Until recently, the current and future conditions indexes for employment tended to be higher than those for households and corporations. Currently, however, the employment indexes have been deteriorating faster than those for households and corporations and are now below them as shown in the second and third charts.