Japanese consumers grew more pessimistic in the fourth quarter as jobs disappeared and wages fell amid the nation's benchmark stock index declining to its lowest level in almost 19 and a half years, a survey showed.
The Cabinet office's confidence index fell to 38.1 in December from 39.6 in September. A reading below 50 shows that pessimists outnumbered optimists. Consumers were less confident on all five topics in the index for the first time since the second quarter of 1998.
Japan's unemployment matched a record 5.5 percent last October, driven higher by bankruptcies of companies such as Kotobuki Industry Co and cuts to jobs and wages. The Nikkei 225 stock average has dropped 8.6 percent in the three months ending December, to its lowest reading since March 1983. That has hurt consumer spending, which makes up more than half of the world's second-largest economy.
"Consumer confidence is weak amid falling household incomes, and people are worried about the economic outlook," said Minako Iida, an economist at Deutsche Securities Ltd.
"The economy is not going to be good," said Toshifumi Sugimoto, who helps oversee 400 billion yen (US$3.38 billion) at Meiji Dresdner Asset Management Co.
Building material supplier Kotobuki owed 18.6 billion yen (US$157 million) when it filed for bankruptcy in October after Mizuho Corporate Bank Ltd and other lenders cut off credit. Prime Minister Junichiro Koizumi's drive to force banks to write off bad loans helped push 19,087 companies into bankruptcy last year.
Confidence may fall further after companies such as JFE Holdings Inc and Taihei Kogyo Co cut jobs to reduce costs in the wake of slumping sales.
"Given that conditions surrounding employment and income have been quite severe, consumer sentiment is weakening," said Yoshihiko Senoo, head of research at the institute that released the report.
"It's hard to see any recovery in Japan's labor market soon," said Iida of Deutsche Bank.
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