Japan's service sector workers were more confident about business conditions in July, due to better sales supported by a heatwave and special demand ahead of the Athens Olympics, a government survey showed on Monday.
The Cabinet Office survey of service sector workers, called "economy watchers" for their proximity to both consumer and retail trends, produced a diffusion index (DI) of 54.3, up from 51.4 in June.
It was the first rise in three months and the 6th straight month of being above 50, the level that shows sentiment remains unchanged.
"As hot days continued, sales of air conditioners and fans and other related items did very well. Flat-screen televisions are also selling well (helped by Olympics demand)," an employee at a household appliance store said in the survey.
Personal consumption, which accounts for over half of the Japanese economy, has been picking up as Japan's recovery broadens and job conditions improve.
But consumption softened in June partly because of bad weather including typhoons and the fact that there was one less Sunday in June than last year. Sunday is a big shopping day in Japan.
The sentiment in the latest survey was in line with economists' views that consumption would pick up again in July due to unusually hot weather in the month. A hot summer usually lifts sales of air conditioners, beer, and other summer items.
"It is so much hotter this year than the cold summer we had last year. We have special demand such as ice creams whose sales were up 180 percent from a year earlier and sales of soft drinks were up 120 percent," said a convenience store employee.
However, the service sector workers, ranging from convenience store employees and taxi drivers to job search centre officials, were cautious about the outlook as strong demand is expected to ease after the Olympic games end and as the continued hot weather would likely slow sales of autumn clothing.
The outlook index indicating the level of confidence in future conditions was at 53.4, down from last month's 54.1.