Japan's Leadership Sees Support Slide

By ALISON TUDOR and TAKASHI NAKAMICHI

TOKYO -- Public support for Japan's new government fell below 50% as budget constraints and internal tensions within the ruling coalition threaten Prime Minister Yukio Hatoyama's major policy pledges.

In its latest retreat, the Hatoyama administration relented on a campaign pledge to drop surcharges on gasoline amid tight budget constraints, saying it would replace the tax with a new one. The pledge was part of an effort to end unpopular taxes and government fees, and to spur consumer spending.

"I must apologize candidly for breaking our campaign promise" to drop the gasoline surcharge, Mr. Hatoyama said Monday.

His government's approval rating fell to 48% over the weekend, from 62% a month ago and from 71% when he took office in September, according to the Japanese daily Asahi Shimbun. The newspaper surveyed 2,115 respondents, asking if they supported the Hatoyama cabinet.

Asahi's poll followed similar results in a survey released Friday by Jiji Press, showing that support for the cabinet had dropped to 46.8%. That survey, conducted last week, included about 2,000 adults.

The results represent a sharp turnaround from August, when Mr. Hatoyama's Democratic Party of Japan trounced the long-ruling Liberal Democratic Party in national elections amid widespread voter concerns over the nation's soft economy and long-term growth prospects.

Public fears are growing over deflation, which some economists believe could send Japan into a double-dip recession. Deflation eats into corporate profits, leading to cutbacks, and keeps consumers from making big purchases as they wait for prices to fall further.

Still, the Asahi poll suggests Mr. Hatoyama has room to maneuver. While overall support for his DPJ was 42%, support for the LDP was far lower at 18%.

At the same time, the government got good news Monday from November trade data, which showed a bigger-than-expected 373.9 billion yen ($4.12 billion) trade surplus, thanks to Japan's first rise in exports to Asia in more than a year. The data added to hopes that Japan's export-reliant economy could steer clear of a double-dip recession -- in which the economy returns to recession after a brief period of growth.

"There now seems to be only a slim chance of Japan's economy suffering a double dip," said Toshihiro Nagahama, chief economist at Dai-ichi Life Research Institute Inc.

Write to Alison Tudor at alison.tudor@wsj.com and Takashi Nakamichi at takashi.nakamichi@dowjones.com