By Leika Kihara
TOKYO (Reuters) -Sentiment in Japan’s service sector improved slightly in June, a government survey showed on Tuesday, as solid demand for summer clothing and leisure offset the gloom from U.S. tariffs.
But corporate bankruptcy cases in the first half of this year rose 2.4% from a year earlier to hit a 12-year high of 5,003, a survey by private think tank Teikoku Databank showed, as rising raw material and labour costs hit margins.
The batch of data highlight the fragile nature of Japan’s economy, which is expected to see the strain from U.S. tariffs intensify in coming months, analysts say, with U.S. President Donald Trump announcing on Monday 25% tariffs on goods from Japan starting August 1.
An index measuring sentiment among firms close to consumers stood at 45.0 in June, up 0.6 point from May, the government’s “economy watchers” survey showed.
An index gauging sentiment three months ahead stood at 45.9 in June, up 1.1 points from May to mark the second straight month of improvement, the survey showed.
“Temperatures are rising so more customers are buying summer goods,” a clothing outlet in Hokkaido, northern Japan, was quoted as saying in the survey. A drugstore in western Japan said sales volume was rising despite price hikes.
Japan’s economy shrank in the first quarter and analysts expect the hit from U.S. tariffs to intensify later this year, stoking fears of a recession – defined as two straight quarters of contraction.
Data on Monday showed real wages in May fell at the fastest pace in nearly two years. The government on Monday made the bleakest assessment of the economy in nearly five years, after an index used to determine economic booms and busts slid in May.
Economic revitalisation minister Ryosei Akazawa said bumper wage hikes and government stimulus measures will likely underpin a moderate economic recovery.
“But the risk of U.S. tariff measures directly and indirectly hurting the economy is heightening,” he told a news conference on Tuesday.
(Reporting by Leika Kihara; Editing by Susan Fenton)
