The Bank of Japan (BoJ) released the General Public‘s Views and Behaviour on 15 August, summarizing a survey of 4,000 individuals.  The majority (64.1%) believed the economic situation has remained the same, compared to one year ago.  However, this number has dropped slightly, from 65.3%, since the last survey conducted in March.  Looking ahead, fewer respondents believed the economy would improve or stay the same.  And the percentage of respondents believing it will worsen increased to 24.7% from 20%.

Not surprisingly, most of the respondents (60.7%) thought the interest rate is too low in Japan, up from 58.2% in March.  Most respondents were not worried too much about the job market and working arrangements over the next 12 months.

So, what are the actual numbers?

The big shock was the release of the June quarter GDP numbers, which had been expected to show 0.5% growth for the quarter.  Instead, the economy shrank 0.3% in the June quarter, leaving it at 1.6% on the same quarter a year ago.

This is bad news for those thinking interest rates were too low.  Monetary policy stayed unchanged at the Committee’s August meeting, and with these latest numbers and the grim outlook for the US, there is little likelihood of a rise in the foreseeable future.  The last change in the overnight call rate was in February this year, lifting it from 0.25% to 0.5%.

Those respondents not too worried about the job market had good reason.  Unemployment dropped from 3.7% to 3.6% in July, the lowest level since December 1997.  But the slowdown in the US may put a damper on manufacturing and associated employment in Japan.

Retail sales dropped 2.2% in July, compared to the previous year, the largest drop since June 2005, driven by falling share prices and wage rates.