Consumer Confidence Index in Japan

The Consumer Confidence Index (消費者態度指数) measures Japanese households' sentiment about their short-term economic prospects (the next six months), on a scale from 0 to 100 where 50 is the neutral level. It is published monthly by the Cabinet Office (ESRI) from a survey of households of two or more members.

It is built by averaging four sub-indices -prospects for overall living standards, income, employment and willingness to buy durable goods-, each scored from 0 to 100 based on surveyed households' responses. The Cabinet Office releases both original and seasonally adjusted series, the latter being the ones markets follow.

It is one of Japan's most closely watched leading indicators of private consumption: it anticipates household spending and complements GDP and retail sales. A reading below 50 reflects widespread pessimism; markets watch both the level and the monthly change as a clue to the direction of consumption.

It is a perception survey, not a measure of actual spending, so it can diverge from real consumption in the short term. It is also sensitive to one-off events -tax hikes, energy and food price shocks or natural disasters- that can distort any single month's reading.