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Japan's economy watcher sentiment in Aug. highest in 11 months

Shoppers buy food at a supermarket in Tokyo's Adachi Ward on April 8, 2020, a day after Prime Minister Shinzo Abe declared a state of emergency in the capital and six other prefectures in response to a recent surge in coronavirus infections. (Kyodo)

TOKYO (Kyodo) -- Business sentiment among workers in Japan with jobs sensitive to economic trends continued to improve in August and recorded its highest level in 11 months as economic activities pressured by the coronavirus pandemic further picked up, government data showed Tuesday.

    The diffusion index of confidence among "economy watchers" such as taxi drivers and restaurant staff, released by the Cabinet Office, rose 2.8 points from July to 43.9, the best showing since September 2019 when private spending increased before a consumption tax hike from 8 percent to 10 percent on Oct. 1 that year.

    The latest reading was up for the fourth consecutive month with retail, housing, manufacturing and employment related indexes showing a notable rise, after it sank to 7.9 in April, the lowest since comparable data became available in January 2002, as economic restrictions weighed heavily on the economy.

    The government declared a nationwide state of emergency in April for Tokyo and six other prefectures to curb the virus spread, later expanding it for the whole country. It was fully lifted in late May.

    "Improvement in sentiment on the employment environment greatly contributed to the outcome," a government official told reporters. "Compared to April and May, (business operators') interest in new hiring has been growing. But the situation is still tough."

    A reading below 50 indicates that more respondents reported worsening conditions than improving ones.

    Respondents were relatively optimistic on the outlook, with the diffusion index gauging business sentiment for the coming months improving 6.4 points to 42.4. In July, the figure fell 8.0 points after recovering for two straight months amid a nationwide resurgence in virus infections.

    The official said that the declining trend of new daily infections was believed to have lifted respondents' views.

    The Cabinet Office maintained its overall assessment, saying that while economic conditions remain severe due to the pandemic, there are signs of picking up.

    A hotel worker in central Japan was quoted as saying that the occupancy rate of expensive rooms has been high owing to tourism subsidy campaigns.

    A restaurant worker in western Japan said the number of customers has been decreasing due partly to measures to ensure social distancing and the heat wave across the country.

    The Cabinet Office polled 2,050 workers from Aug. 25 to 31, of whom 1,834, or 89.5 percent, responded.

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