Japan's service sector improved again in May emotion

Sentiment in Japan's service sector improved for a second consecutive month in May as government and private reconstruction and restoration efforts, following the March 11 quake and tsunami, intensified, the Cabinet Office said Wednesday in its monthly "Economy Watchers" survey.

The current conditions index rose to 36.0 in May, from 28.3 logged in April and increasing well above a two-year low of 27.7 booked in March at the height of the cataclysm that occurred the same month.

The forward-looking index, which gauges conditions two to three months ahead, rose to 44.9 in May from 38.4 in April, marking the second straight month of improvement, the government data showed.

The latest survey showed that "watchers" feelings about upcoming conditions are becoming more optimistic as concerns about the economic impact of the March 11 disasters continue to subside and service-based workers at restaurants, hotels, department stores and lifestyle facilities like clubs and gymnasiums, are starting to see increased trade as private and business consumption increases.

The rise in May's survey was due to more people seeing business conditions in japan as getting better and less people saying things are getting worse -- the monthly government survey is gauged by a score above 50 meaning those "watchers" surveyed, have an optimistic feeling about business conditions and a score below 50 meaning the opposite.

Based on the results of the May survey, which showed improvements in household spending, corporate activity and employment, the cabinet office marginally upgraded its assessment of the nation's economy, saying that while the economy is in a " severe situation" due to the quake, it also shows some "upward movement."

The previous assessment based on the survey made no mention of any upward movement and in March the government said the economy had "rapidly declined," following Japan's costliest post-war natural disaster, estimated at 25 trillion yen (309 billion U.S. dollars).

The Economy Watchers survey asks business-cycle sensitive workers their thoughts on existing and future economic conditions to provide the government with a detailed picture of economic trends in Japan.

The outcome of the monthly survey is followed closely by the Bank of Japan as it reflects retail sector sentiment more precisely than some other government data.

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