Confidence weakens among Japanese manufacturers

TOKYO

Confidence weakened among Japan’s major manufacturers for the first time in nearly two years, a key business survey showed on April 1, as concern grows over the impact of the Ukraine crisis.

The Bank of Japan’s Tankan business survey showed a reading of plus 14 for major manufacturers, lower than the previous plus 17.

A positive figure means more manufacturers see business conditions as favorable than those that consider them unfavorable, and the survey is considered to be the broadest indicator of how Japan Inc. is faring.

The latest reading - the first decline in seven quarters - comes more than a month after Russia invaded Ukraine, starting a war that has pushed up raw material prices and triggered parts
shortages.

“While (plus 14) is still not particularly weak by past standards, it suggests that supply shortages are still hampering some manufacturers,” said Tom Learmouth, Japan economist at Capital Economics.
“Non-manufacturing sentiment held up better-than-expected during the Omicron wave and the labor market continued to tighten,” he added.

“Indeed, we think output will rebound strongly in Q2.”

Japan’s top government spokesman said on April 1 that major manufacturers’ business confidence was still at a high level despite the drop.

“The situation reflects weakness in some areas, as the difficult situation caused by the pandemic remains,” Hirokazu Matsuno said at a regular press conference.

The government is planning measures to cushion the impact of commodity inflation, he added.