MNI: Japan's April Sentiment Indexes Drop, Govt Cuts View

Japan’s Economy Watchers Survey showed sentiment worsening in April, with both the current and outlook indexes falling for the fourth and fifth consecutive months respectively, prompting the government to downgrade its economic assessment for the first time since February 2025.

The Cabinet Office said the economy is “showing recent weakness,” as the sentiment index for current conditions fell to a seasonally adjusted 42.6 in April from 45.1 in March. The outlook index, which reflects expectations two-three months ahead, dropped to 42.7 from 45.2.

Indexes across households, the labour market, and businesses all declined, reflecting growing concerns over persistent high prices and U.S. trade policy impacts.

A senior Cabinet Office official clarified that the downgrade applies specifically to the Economy Watchers Survey and does not reflect the government’s broader economic stance. Respondents cited instability in financial markets and cost pressures as key concerns.

The data adds to worries over private consumption, as wage increases have yet to keep pace with inflation. 

This could prompt the Bank of Japan to adopt a more cautious view, particularly with further price hikes expected to erode household purchasing power.