— Japan June Watchers’ Current Index 43.8 Vs May 47.2
— Japan Watchers’ Current Index Posts 3rd Straight Fall
— Japan June Watchers’ Forward-Looking Index 45.7 Vs May 48.1
— Japan June Forward-Looking Index Posts 2nd Straight Fall
— Japan Govt Downgrades View: Economy Shows Some Weakness

TOKYO (MNI) – The Economy Watchers’ Survey index for Japan’s
current economic climate dropped in June for the third month in a row to
its lowest level in more than a year as subsidy-driven car sales appear
to have peaked while uncertainties about domestic demand have increased,
Cabinet Office data released Monday indicated.

In addition, the forward-looking index fell for the second straight
month due to worries about summertime electricity supply shortages and
the impact of the proposed sales tax increase on consumer sentiment.

The current conditions index fell to 43.8 last month from 47.2 in
May, with the June level the lowest since May 2011, when it stood at
36.1 in the aftermath of the devastating earthquake. The June came as
the pace of year-on-year growth in new vehicle sales slowed to +40.9% in
June from +66.3% in May and +92.0% in April.

In December the government revived subsidies for buying
low-emission vehicles. The program had been terminated in September
2010, which caused a year-long stagnation of domestic vehicle sales.

However, because the program is running out of money due to strong
demand, it may be terminated again in July, two months earlier than
expected, press reports have said.

The government also revived last year its temporary reward program
for buying energy-saving houses while the government-affiliated Japan
Housing Finance Agency resumed offering low rates on long-term loans
for home buyers.

But the land ministry announced last week that it terminated
applications for reward points, which were given to owners of greener
homes under construction or those being renovated to save energy
consumption. The program was terminated nearly four months earlier than
the Oct. 31, 2012 end-date in the original plan.

The forward-looking index, which gauges conditions two to three
months ahead, slipped to 45.7 in June from 48.1 in May, a second
straight fall.

Based on the survey results, the government downgraded its economic
assessment, saying that the economy is “now showing some weakness.”

In the previous month, the government said that “the pace of the
recovery has moderated.”

The watchers’ index gauges whether respondents with jobs most
sensitive to economic conditions — taxi and truck drivers, department
store sales staff as well as restaurant and shop owners — believe
economic conditions have improved or worsened from three months before.

The household sub-index for the current conditions fell to 42.1 in
June from 46.4 in May.

The business sub-index for current conditions declined to 44.4 in
June from 45.9 in May.

The labor sub-index decreased to 53.9 in June from 55.2 in May. It
hit 59.6 in April, which was the highest reading since October 2006.

The Cabinet Office said the survey was conducted between June 25
and June 30.

tokyo@marketnews.com
** MNI Tokyo Newsroom: 81-3-5403-4835 **

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