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Economy

Business sentiment brightens in Japan in November: survey

Index tops boom-or-bust line for first time in 11 months

Pedestrians in Tokyo's Shibuya shopping district. The Japanese economy seems to have remained on a recovery track despite a slowdown in the summer from natural disasters.   © Kyodo

TOKYO -- Business confidence among taxi drivers, store clerks and others working on the front lines of the Japanese economy is improving following a series of natural disasters over the summer.

The seasonally adjusted diffusion index of business sentiment among people in positions sensitive to economic trends rose to 51.0 in November, up 1.5 points from the month prior, according to the Cabinet Office's Economy Watchers Survey released Monday. That represents the second straight month of gains and the first time the index has climbed above the boom-or-bust line of 50 since December 2017.

In addition, the Cabinet Office lowered its estimate for July-September gross domestic product to an annualized real drop of 2.5%, owing to a string of natural disasters during the quarter. Floods ravaged western Japan and major earthquakes struck the northern island of Hokkaido in September.

Yet household activities rebounded in November, with hotel and restaurant reservations rising. Better weather and lower crude oil prices helped. The Cabinet Office's basic assessment of the economy was slightly more upbeat than the one for October. Although the GDP figure was downgraded from the preliminary estimate, many analysts believe that the economy will return to a mild recovery track in October and afterward.

The index for economic conditions two to three months down the road climbed 1.6 points to 52.2.

"The July-September condition was temporary, and the economic recovery is continuing," said Shinichiro Kobayashi, an economist at Mitsubishi UFJ Research and Consulting. The consultancy estimates annualized growth of 1.5% for the October-December period.

The survey was carried out from Nov. 25 through Nov. 30, collecting responses from about 2,000.

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