Japanese consumers became the most pessimistic they’ve been in at least 26 years, indicating their spending is unlikely to trigger a recovery in the world’s second-largest economy.
The sentiment index dropped to 31.4 last month from 32.6 in June, the Cabinet Office said yesterday in Tokyo, the lowest since the government began compiling the figures in 1982. The median estimate of seven economists surveyed by Bloomberg was for confidence to fall to 32.
The government said last week that Japan may be in a recession as rising prices damp profit growth, prompting some companies to cut wages and hiring. Japanese Prime Minister Yasuo Fukuda is scheduled to announce an economic stimulus package this month to ease the impact of higher oil and food prices.
“This weak sentiment indicates Japan’s revival will need to come from global demand, not consumer spending,” said Masamichi Adachi, senior economist at JPMorgan Chase & Co in Tokyo. “We’re just seeing the beginning of a recession and conditions could deteriorate even further.”
GDP probably contracted at an annual 2.3 percent rate last quarter, bringing the country to the brink of its first recession in six years, the median estimate of 29 economists surveyed by Bloomberg showed ahead of a report due today.
Higher prices are causing consumers to pare spending. Households cut spending for a fourth month in June after the jobless rate rose to the highest since September 2006.
Japan’s gasoline prices rose to a record ¥185.1 (US$1.68) a liter last week, the Tokyo-based Oil Information Center said.
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