Confidence falls among Japan’s major manufacturers

TOKYO

Business confidence fell slightly among Japan’s largest manufacturers for the fourth straight quarter, a closely watched Bank of Japan survey showed yesterday.

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 businesses are faring - showed that major manufacturers still feel much more upbeat than during the depths of the COVID-19 pandemic.

Confidence among large manufacturers stood at plus seven, down slightly from plus eight three months earlier.
A positive figure means more manufacturers see business conditions as favourable than those that consider them unfavourable.

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

The reading has been falling since April after nearly two years of improving sentiment, which had plunged to minus 34 in June 2020 as COVID-19 restrictions pummelled the economy.

Among large non-manufacturers, business confidence improved to 19 from a previous reading of 14, the Tankan showed.
“On the whole, 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 of Dai-ichi Life Research Institute.

Inflation hit a four-decade high of 3.6 percent in October, ramping up 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 lower yen.