Japan’s economy may be on a recovery track from pandemic pain, the government statistics imply

 

Japanese economy starts to get a traction gradually

The Japanese cabinet office announced that the coincident index of business conditions for August 2020, which indicates the current state of the economy, was 79.4, up 1.1 points from the previous month rising for the third consecutive month. 

Business activities depressed by the pandemic gradually started to gain a bit more traction with exports of automobiles to the United States and other countries picking up. The assessment of current business conditions has also been revised upward from "deteriorating" to "stopping to decline" for the first time in a year and three months. 

The leading index, which indicates the outlook of the economy several months later, also increased by 2.1 points from the previous month marking the third consecutive month of improvement.

According to another survey by the cabinet office to gauge sentiment of more than 2,000 workers such as taxi drivers, hotel workers and restaurant staff, called “economy watchers” for their proximity to consumer and retail trends, showed their confidence about current economic conditions grew 5.4 points from August to 49.3 in September. 

It was the fifth straight month of increase and not only having recovered to levels before the spread of the new coronavirus infection but reaching to the highest level since April 2018.

Hardest hit service industry is also bottoming out, the Tankan shows

In addition, the Bank of Japan's key survey, “tankan”, showed business sentiment improved in July-September period from a 11-year low hit three months ago in a sign the economy is gradually emerging from the devastating hit from the pandemic. 

The survey indicates the business sentiment of large manufacturers improved with the index increasing to minus 27, up 7 points from the previous survey in June. This is the first improvement in 2 years and 9 months since December 2017. 

Service industry which was hit directly by the spread of the infection may also have been bottoming out after economic activities halted by the new coronavirus have resumed. 

The index for large nonmanufacturers including the service sector improved to minus 12 from minus 17. The improvement is the first in a year and three months. Sentiment among hotels, restaurant operators and leisure facilities which was the lowest ever in the previous survey improved 4 points to minus 87 although it’s still far below levels seen before the outbreak.