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Japan economy watcher sentiment up in May on service sector recovery

College students walk along the shore of a seaside park as an airplane prepares to land at Haneda Airport in Tokyo, on June 2, 2022. (AP Photo/Hiro Komae)

TOKYO (Kyodo) -- Business confidence among workers with jobs sensitive to economic trends rose for the third straight month in May, supported by a solid service sector in the wake of the removal of anti-coronavirus restrictions, government data showed Wednesday.

    The diffusion index of confidence in current conditions compared with three months earlier among "economy watchers," such as taxi drivers and restaurant employees, came to 54.0, up 3.6 points from April, according to the Cabinet Office.

    A reading above 50 indicates that more respondents reported improving conditions than worsening conditions over the past three months.

    Following the continued improvement, the Cabinet Office upgraded its basic assessment, saying, "The economy is gradually picking up," and dropped its reference to the negative impact of the coronavirus for the first time since it appeared in February 2020.

    In the poll, many workers said their businesses fared well during the weeklong Golden Week holiday through early May. It was the first time in three years that the key holiday period for the tourism and retail sectors saw no COVID-19 restrictions such as shorter working hours for restaurants and bars.

    "Even after Golden Week, we have seen more customer visits on weekday evenings or weekends," a staffer at a department store in the southwestern region of Kyushu said, adding that people appear to be less cautious about going out.

    A worker at a shop on a shopping street in the Tohoku region in northeastern Japan said social activities are returning to normal, with festivals and events being planned ahead of summer.

    Still, many voiced concerns over the business outlook, citing surging food, fuel and other commodity prices following Russia's invasion of Ukraine.

    "Raw material prices have surged and almost all of our retail prices were raised," an appliance store worker said. "We are also facing a serious supply shortage due to the Ukraine crisis, lockdowns in China and the semiconductor drought."

    The diffusion index gauging business sentiment in the coming months climbed 2.2 points from the previous month to 52.5 in May, rising for the fourth straight month.

    The Cabinet Office surveyed 2,050 workers from May 25 to 31, of whom 1,831, or 89.3 percent, responded.

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