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Economy in Brief

Economy Watchers in Japan Show Concern for the Future
by Louise Curley  August 8, 2011

Japan's Economy Watchers were a bit less optimistic about future conditions in July than they were in June. The diffusion index that expresses their judgment on future conditions dropped 0.5 points from 49.0 in June to 48.5 in July. At the same time, they continued to be positive about current conditions, showing a 3.0 point increase from 49.6 in June to 52.6 in July in the diffusion index that expresses their judgments on current conditions.This is one of the few times that their judgment on current conditions is more optimistic than that on future conditions, as can be seen in the first chart. Both the judgment on the current and future conditions are well above the indexes of March, the month of the earth quake and the tsunami when the index of judgment on future conditions was 26.6 and that for current conditions was 27.7.

Incoming data on the economy has generally been supportive of Japan's recovery from the disasters. Today, for example, balance of payments data show improving exports. Exports in June were 5504 billion yen, up from 3638 billion yen in March. The year to year change in exports has risen from a decline of 10.71% in April to one of 9.82% in May and one of 1.05% in June. However, one of the effects of the current financial turmoil in Europe and the United States has been to put upward pressure on the Yen. The yen has appreciated almost 10% over the past year and further appreciation is likely to dampen exports. Moreover, the current financial crises is likely to slow activity in Europe and the U. S., two of Japan's major customers.

The Economy Watchers can hardly ignore the current financial crisis and their judgment of future conditions is

bound to be more tenuous than it had been.

JAPAN Jul
11
Jun
11
May
11
Apr
11
Mar
11
Feb
11
Economy Watchers Survey
Diffusion Indexes
Judgment on Current Cond. 52.6 49.6 36.0 28.3 27.7 48.4
Judgment on Future Cond. 48.5 49.0 44.9 38.4 26.6 47.2
Year over Year Percentage Chg
NSA, 100 Million Yen Jun
11
May
11
Apr
11
Mar
11
Jun
11
May
11
Apr
1l
Mar
11
Exports of Goods 55041 45391 48776 36382 -1.05 -9.82 -10.71 -1.36
Imports of Goods 53729 63117 52945 50884 11.91 17.70 12.27 16.73
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