Consumer sentiment improved for the eighth consecutive month in August, with the index rising to 40.4 from 39.7 in the previous month amid expectations for a rise to40.2, while household confidence advanced to 40.1 from 39.4 in July. The breakdown of the report, which excludes one-person households, showed the average livelihood rose for the seventh month to 39.9, while income growth surged for the sixth month to 38.1. In addition, the gauge for employment rose to 36.0, while consumers’ willingness to buy durable goods slipped to 46.3 from 47.3 in July. Despite the rebound in consumer confidence, the data foreshadows a weakening outlook for domestic demands as households face a weakening labor market paired with lower wages, and the newly elected Democratic Party of Japan (DPJ) may take additional steps to jump-start the ailing economy in an effort to mitigate the risks for a double-dip recession. As global trade conditions remain subdued, firms may continue to scale back on production and employment in order to lower their cost structure, and fears of a slower recovery is likely to weigh on consumers as the outlook for future growth remains uncertain.
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