Japan: Consumer sentiment drops sharply following decision to hike sales tax
November 12, 2013
Consumer sentiment plunged from 45.4 points in September to 41.2 points in October, marking the lowest reading in 10 months. The print undershot market expectations of a rise to 45.5 points. The consumer confidence index measures consumers' expectations over the next six months on a scale of 0-100, where 100 points indicates that all respondents see their living standards improving.
Consumers were more pessimistic across-the-board in October. Households' views on their employment prospects and their overall livelihood suffered the sharpest decreases, while their opinions regarding income growth and their willingness to buy durable goods declined more mildly. According to some analysts, the decision to increase the sales tax has dampened consumer sentiment.
FocusEconomics Consensus Forecast panelists expect private consumption to increase 1.8% in 2013, which is unchanged from last month's forecast. In 2014, the panel sees private consumption growing 0.6%, which is also unchanged over the previous month's estimate.