Japan consumer confidence hits record low amid virus pandemic

30, Apr. 2020

Ginza, Tokyo (Photo by Claudio Guglieri on Unsplash)
Ginza, Tokyo (Photo by Claudio Guglieri on Unsplash)

TOKYO, Kyodo - Japan's consumer confidence fell to the lowest level on record in April as the economy struggles with the fallout from the global coronavirus pandemic, government data showed Thursday.

The seasonally adjusted index of sentiment among households made up of two or more people stood at 21.6, the lowest level since April 2004 when the survey began being released on a monthly basis, according to the Cabinet Office.

Falling for the fourth straight month, the index, which gives an indication of consumers' economic expectations for the coming six months, plunged from March's 30.9. A reading below 50 suggests pessimists outnumber optimists.

"We've never seen such a huge drop so far," a government official told reporters, adding, "We guess that the survey results reflected the virus factors, such as (the Japanese government's) requests for people to stay at home and suspend business operations, as well as growing public concerns about employment."

The Cabinet Office downgraded its basic assessment, saying that consumer sentiment has been "rapidly worsening," with the official saying that the government has never used such a pessimistic expression. The office said in March that sentiment was "worsening."

The latest figure was far worse than the previous record of 27.5 in January 2009, when Japan and the rest of the world were in the aftermath of the global financial crisis triggered by the collapse of Lehman Brothers Holdings Inc. the previous year.

The drop of 9.3 points is also the biggest ever, topping that of 7.4 points posted in March.

All of the survey's four components fell to the lowest-ever levels and the biggest decreases. Among them, consumers' assessment of employment conditions dropped 12.9 points to 15.0, while that of income growth fell 8.5 points to 26.3, and that of livelihoods decreased 8.1 points to 21.9.

Their readiness to buy durable goods stood at 23.3, down 7.7 points.

In the survey, 70.7 percent of households said they expect consumer prices to rise in the year ahead, compared to 70.3 percent in March, and 10.8 percent said they expect prices to fall, down from 11.0 percent in the previous month.

The consumer confidence survey, conducted on April 15, covered 8,400 households, including 2,688 single-member households, with valid responses received from 6,580, or 78.3 percent. (Kyodo)