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Japan households' confidence slumps to decade low-BOJ

10/22/2020 | 01:52am EDT

* Households increased spending on food, electronic devices

* Nearly 60% of households said no big change in income vs March

* Nearly 90% cut spending on leisure, entertainment - survey

* Households' inflation expectations weaken from June

TOKYO, Oct 22 (Reuters) - Japanese households' confidence in the economy slumped to a decade-low in the three months to September, a central bank survey showed, underscoring the pain the coronavirus pandemic has inflicted on the world's third-largest economy.

The data heightens the chance the government and the Bank of Japan will maintain their massive stimulus programmes to cushion the economic blow from the pandemic.

The diffusion index gauging households' sentiment on current economic conditions hit -75.6 in September, worse than -71.2 in June, the BOJ's quarterly survey showed on Thursday.

It was the worst reading since June 2009, when the global financial crisis, triggered by the collapse of Lehman Brothers, jolted markets and dealt a severe blow to Japan's economy.

"The survey was compiled around the time when infection numbers were rising in Tokyo, which may have made households cautious over the pandemic," a BOJ official told a briefing.

The survey was conducted between Aug. 19 and Sept. 14.

Compared with a year ago, households increased spending on food, electronic devices and daily necessities, while slashing those on dining, travel and clothes, the survey showed.

Nearly 60% of those surveyed in September said their income did not change much from March, when the coronavirus pandemic began spreading across Japan.

But 87.7% said they cut spending on leisure and entertainment compared with March, of which 57.3% said they plan to curb spending further or not change much the amount they spend - a sign consumption will continue to stagnate.

The survey also showed 63.3% of the respondents expect prices to rise a year from now, down from 66.7% in June.

The diffusion index is calculated by subtracting those who believe the economy worsened from a year ago, from those who feel it improved. A negative reading shows pessimists outnumber optimists. (Reporting by Leika Kihara; Editing by Kim Coghill and Ana Nicolaci da Costa)


ę Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
CANADIAN DOLLAR / JAPANESE YEN (CAD/JPY) 0.03% 90.223 Delayed Quote.11.49%
EURO / JAPANESE YEN (EUR/JPY) 0.06% 132.861 Delayed Quote.5.70%
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