Confidence falls among Japan’s top manufacturers

Business confidence fell slightly among Japan’s biggest manufacturers for a fourth straight quarter, a closely followed Bank of Japan survey showed on Wednesday.

Optimism grew among non-manufacturers, however, and both readings beat market expectations.

The BOJ’s quarterly Tankan survey, considered the broadest indicator of how Japanese companies are doing, showed that major manufacturers are still feeling much more optimistic than during the depths of the COVID-19 pandemic.

Confidence among major manufacturers stood at plus seven, down slightly from plus eight three months earlier.

A positive number means that more manufacturers see trade conditions as favorable than those who see them as unfavorable.

Economists had forecast six more for Wednesday’s reading.

“Weak demand in overseas markets, including China, which was hit by its zero-Covid policy, was a headwind for manufacturers,” Mizuho chief economist Saisuke Sakai told AFP Research & Technologies.

The reading has been falling since April after almost two years of improving sentiment, which had fallen to minus 34 in June 2020 as Covid-19 restrictions hit the economy.

Among major non-manufacturers, business confidence improved to 19 from a previous reading of 14, the Tankan showed. Market economists had forecast 16 more.

For non-manufacturers, “subsidies from the government’s tourism campaign as well as the easing of border controls led to a recovery in demand,” Sakai said, noting that recent indicators showed a solid recovery in consumption .

“Overall, the economy is not in bad shape, but looking ahead, the prospect of a global economic slowdown is a risk,” said Shinke Yoshiki, chief economist at the Dai-ichi Life Research Institute. ichi.

Sakai agreed, saying inflation, fueled by high energy costs and a weak yen, would also continue to weigh on the Japanese economy.

Inflation hit a four-decade high of 3.6 percent in October, increasing pressure on Japan’s central bank to move away from its ultra-loose monetary policies.

The government in October pledged to spend $260 billion on a stimulus package to cushion the economy from the impact of inflation and the falling yen.

© 2022 AFP

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