Service sector

Japan’s service sector mood improving, but novel COVID dampens cloud outlook

Customers eat sushi on a conveyor belt at a Kura Sushi restaurant in Tokyo, Japan, June 3, 2021. Picture taken June 3, 2021. REUTERS/Kim Kyung-Hoon/Files

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  • Sentiment among ‘economy watchers’ up for first time in three months
  • The government says the economy is picking up although the situation is serious
  • Tokyo’s renewed state of emergency sees outlook darkening

TOKYO, July 8 (Reuters) – Japan’s services sector confidence index rose for the first time in three months in June, a government survey showed on Thursday.

even as the government prepared to declare a state of emergency in Tokyo to curb a new wave of coronavirus infections.

The index, which rose 9.5 points to 47.6 in June, is based on a survey of workers such as taxi drivers, hotel workers and restaurant staff who are called “watchers of economy” for their proximity to consumer and retail trends.

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While that index focused on prevailing economic conditions, a separate index measuring the outlook for future conditions improved for a second consecutive month, gaining 4.8 points to 52.4 in June.

Some analysts say the improvement may prove temporary given that plans for a fourth round of coronavirus emergency measures in Tokyo from next week until August 22, to make the capital safer while it hosts Olympic Games.

Based on the survey, the Cabinet Office improved its view of the economy, saying it was “recovering”, albeit from a serious state.

After issuing a cautiously optimistic note, the Bank of Japan is expected to conduct a policy review on July 15-16, when it will release its latest growth and inflation projections.

Japan’s economy contracted 3.9% year-on-year in the first quarter and likely grew only modestly from April to June.

Many analysts expect consumption to remain weak, in part due to a slow rollout of vaccines.

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Reporting by Tetsushi Kajimoto; additional reporting by Kaori Kaneko; Editing by Simon Cameron-Moore

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