— Japan May Watchers’ Current Index 47.2 Vs Apr 50.9
— Japan Watchers’ Current Index Posts 2nd Straight Fall
— Japan May Watchers’ Forward-Looking Index 48.1 Vs Apr 50.9
— Japan Apr Forward-Looking Index Posts 1st Fall in 2 Months
— Japan Govt Downgrades View: Pace of Recovery Has Moderated

TOKYO (MNI) – The Economy Watchers’ Survey index for Japan’s
current climate slumped for a second straight month in May as
subsidy-driven car sales appear to be peaking and concerns about the
yen’s rise are growing, Cabinet Office data released Friday showed.

The forward-looking index also marked the first fall in two months
because summertime electricity supply shortages are feared in western
Japan and the drag from the high yen on exports is also making the
outlook uncertain.

The current conditions index fell to 47.2 last month from 50.9 in
April as the pace of year-on-year growth in new vehicle sales slowed to
+66.3% in May from +92.0% in April and +78.2% y/y in March while retail
sales were hit by stormy weather conditions.

Government subsidies for buying low-emission vehicles will likely
be terminated in July, two months earlier than expected, as the program
is running out of money, the Nikkei reported recently.

Applications for a total of Y143.1 billion in subsidies, out of the
Y274.7 billion budget, had been filed as of last Friday, according to
the report.

In volume terms, applications received by Friday covered 1.51
million vehicles, or about 60% of all new cars sold since the current
program was launched at the end of last year, the business daily said.

Meanwhile, the forward-looking index, which gauges conditions two
to three months ahead, slipped to 48.1 in May from 50.9 in April,
posting the first fall in two months.

The government downgraded its economic assessment based on the
survey, saying that “the pace of the recovery has moderated.”

In the previous month’s report, the government said that “the
economy is recovery.”

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 46.4 in
May from 50.3 in April.

The business sub-index for current conditions declined to 45.9 in
last month from 48.7 in April.

The labor sub-index decreased to 55.2 in May from 59.6 in April
from 58.1, which was the highest reading since October 2006, when the
index was at 60.6.

The Cabinet Office said the survey was conducted between May 25 and
May 31.

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

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