Morale in Japan's service sector drops fastest in a year over pandemic

By Reuters

<p><body> <p>By Tetsushi Kajimoto</p> <p><span class="caps">TOKYO</span> (Reuters) – Japan’s service sector confidence fell at the sharpest pace in a year in April, a Cabinet Office survey showed on Thursday, as curbs aimed at containing a resurgence of <span class="caps">COVID</span>-19 infections depressed consumer spending. </p> <p>Japan put in place a third state of emergency in Tokyo and some other areas late last month and has extended the measures until the end of May as the country struggles to contain a fourth wave of infections.</p> <p>Analysts expect gross domestic product data due next Tuesday to show the world’s third largest economy shrank in January-March as the curbs hit face-to-face service activity hard.</p> <p>As private consumption accounts for more than half of the economy, the outlook for the current quarter appears dark as well.</p> <p>“Household sentiment turned out particularly weak as more and more people have refrained from unnecessary outings and shopping,” said Masaki Kuwahara, senior economist at Nomura Securities.</p> <p>Thursday’s survey of workers such as taxi drivers, hotel workers and restaurant staff – called the “economy watchers” index for their proximity to consumer and retail trends – showed their confidence about current economic conditions fell 9.9 points from the previous month to 39.1 in April.</p> <p>It was the first decline in three months.</p> <p>All the component indexes measuring sentiment at households, businesses and employment worsened, the survey showed. </p> <p>The Cabinet Office cut its view on the survey for the first time in three months, saying that the economy remains severe due to the pandemic and a pick-up will be weak. As for the outlook, it said anxiety is mounting over virus developments.</p> <p>A year ago the index plunged to 7.9, the lowest level since the survey began in 2000, as the economy took a hard hit from the first wave of the pandemic and suffered its worst post-war slump.</p> <p>The outlook index, indicating the level of confidence in future conditions, fell 8.1 points to 41.7 in April, down for a second straight month.</p> <p>“Given the latest emergency, private consumption will likely remain stagnant in May as well,” Nomura’s Kuwahara said.</p> <p/> <p> (Reporting by Tetsushi Kajimoto; additional reporting by Kaori Kaneko; Editing by Kim Coghill)</p> </body></p>