— Japan Mar Econ Watchers’ Index Up For 4 Months In Row
— Japan Mar Watchers’ Forward-Looking Index 47.0 Vs Feb 44.8
— Japan Watchers’ Outlook Index Also Up For 4 Months In Row
— Japan Govt Upgrades View: Econ Tough But Move For Pickup Seen

TOKYO (MNI) – The Economy Watchers’ Survey index for current
conditions in Japan rose to a three-year high of 47.4 in March from 42.1
in February, marking the fourth straight monthly rise on strong demand
for flat-screen TVs and cars, the Cabinet Office said Thursday.

The latest survey showed that “the economy is in tough condition
but there are signs of an improvement,” the Cabinet Office said,
upgrading its view for the second straight month.

Last month, it said that “the economy is in tough condition but its
downtrend has ceased,” which was more positive than its previous
statement that “the economic downtrend has ceased but weak movements are
continuously seen.”

“The household index rose thanks to sharply higher sales of
flat-screen TVs due partly to rush demand before changes were made in
April to the reward program for purchases of greener consumer
electronics as well as solid sales of passenger cars on subsidies and
tax breaks for buying low emission vehicles,” the Cabinet Office said.

It also said consumers still sought lower priced goods but they
were more willing to spend.

The survey was conducted between March 25 and March 31.

The 5.3-point rise in March was due to fewer people saying things
were worse than three months earlier and more people seeing conditions
were better. It followed a 3.3-point rise in February.

The 7.0-point drop in November 2009, which is believed to have been
caused by the government’s ill-timed announcement that Japan was back in
mild deflation, was the largest fall since the survey began in August
2001.

Through March 2010, the headline index stood below the key 50 level
— the dividing line between net positive and net negative responses to
the survey — for the 36th straight month.

But the index has recovered to 47.4, the highest level in about
three years since 49.7 marked in April 2007, six months before Japan’s
slow, but longest, post-war economic expansion ended.

The headline index hit a record low of 15.9 in December 2008 at the
height of the global financial crisis, but posted its first gain in 10
months in January 2009 as more people thought conditions were unchanged
after deteriorating drastically in previous months.

The index then rose for seven months in a row but bad weather
conditions and the pandemic of swine flu hurt sentiment in August 2009.
It fell in October and November last year on fears of a worsening
deflation after rising briefly in September.

In March, the business index (manufacturers and non-manufacturers
serving other businesses) posted the third straight monthly gain as both
orders and sales improved despite downward pressure on prices, the
Cabinet Office said, repeating its recent assessment.

The labor index posted the fourth straight monthly rise because
some firms began to hire people, as seen in the previous months.

The overall forward-looking index, which gauges conditions two to
three months ahead, rose to 47.0 in March from 44.8 in February, up for
the fourth month in a row.

The index stayed below the key 50 level for 34 months in a row.

In January 2009 the index rebounded to 22.1 from a record low of
17.6 hit in December 2008.

The forward-looking index rose on expectations that the latest
stimulus measure to subsidize high school tuitions, effective in April,
as well as a new reward program for buying greener homes and renovating
existing homes to be more energy efficient, effective in March, should
continue supporting the household sector, despite concern about a
decline in flat-screen TV sales after rush purchases in March, the
Cabinet office said.

Companies expect orders to grow and there are moves to hire
more employees, it added.

The survey outcome is monitored closely by the Bank of Japan as it
appears to reflect retail sector sentiment more accurately than some
other data.

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

tokyo@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4833 **

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