While new virus cases and hospitalisations have hit record-highs this week, the rebound in services consumption in Q2 suggests that households are getting increasingly blasé about state of emergency declarations. One small downside risk are part shortages resulting from virus disruptions in Southeast Asian suppliers. But given that Japan is on track to reach vaccination levels that have prompted other large advanced economies to ease virus restrictions by the end of this quarter, any setback in manufacturing will probably be overwhelmed by a further recovery in services.
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