THE mood among Japanese merchants plunged in August, dropping the most since the very early days of the pandemic, as the Delta variant of the coronavirus set records for new cases and ended up pushing the prime minister to resign.

A gauge of sentiment among store managers, taxi drivers and others who deal directly with Japanese consumers slid 13.7 points to 34.7, the Cabinet Office’s Economy Watchers survey showed yesterday, with the below-50 reading indicating that pessimists outnumber optimists.

The sharpest deterioration in a year and a half sent the gauge back to its lowest point since January when Tokyo returned to a state of emergency.

The surge in virus cases that sent sentiment careening also drove Prime Minister Yoshihide Suga to announce his resignation last week. The country’s next leader is likely to call for a new stimulus package to shore up the recovery.

A separate report earlier yesterday showed the economy grew more quickly than initially thought last quarter, but the sharp crash in sentiment among small businesses suggests momentum may have slowed sharply since.

Case numbers have subsided in recent days, but the government later this week is likely to extend its fourth state of emergency to try to contain the virus spread while the country’s vaccination drive plows ahead.

Sentiment fell in all 10 major regions tracked by the survey. The mood among bar and restaurant operators, which have endured government calls for shortened hours and a stoppage to alcohol sales, fell the most among sectors. (SD-Agencies)