Japan Govt: Consumer Sentiment Index 39.4 Jul Vs 37.6 Jun

TOKYO -- Japanese consumers were more upbeat in July on the outlook for the world's second largest economy than they have been in more than a year and a half, the government said Tuesday.

The index for the Cabinet Office's consumer confidence survey, which measures consumers' economic outlook for the coming six months, stood at 39.4 in July, its highest level since November 2007 and the seventh-straight monthly rise.

That prompted the government to upgrade its assessment. It now says that sentiment is "continuing to show signs of picking up," dropping the phrase "despite remaining severe" that appeared in last month's assessment.

The result may allay concerns that Japan's worsening jobs market is souring sentiment among consumers, whose spending accounts for roughly 55% of the country's gross domestic product. Japan's jobless rate rose to 5.4% in June, just below its postwar high of 5.5%.

But so far sentiment surveys have continued to tick up slightly on expectations that the worst may already be over for the country's most severe recession since World War II. Government stimulus measures - including purchase incentives for eco-friendly cars and electronic goods - have also helped, analysts said.

Highlighting the continued improvement in economic sentiment, separate data released by the Cabinet Office Monday showed the economic outlook among Japanese workers brightened again in July. The main index of the Economy Watchers Survey, which polls workers thought to have a clear vantage on economic trends, rose slightly to 42.4 from 42.2 in June, its seventh straight month of improvement.

But overall consumer and worker sentiment remains at historically low levels, and could yet worsen as the one-off effects of government stimulus measures wear off, and anxiety over job security and wages prompts consumers to cut back more on spending, analysts said.

In June, the jobs-to-applicants ratio fell to an all-time low, with only 43 jobs available for every 100 applicants. Monthly wages, meanwhile, slid by a record 7.1% on year.

For the consumer confidence data, the Cabinet Office surveyed 5,052 households nationwide on July 15. The survey had a response rate of 75.2%.