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2022.12.14 13:47 GMT+8

Confidence falls among Japan's major manufacturers

Updated 2022.12.14 13:47 GMT+8
CGTN

Workers install a battery pack onto an electric vehicle on the production line at a plant in Kurashiki, Okayama Prefecture, Japan, May 19, 2022. /CFP

Business confidence fell slightly among Japan's largest manufacturers for the fourth straight quarter, a closely watched Bank of Japan (BOJ) survey showed 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 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 favorable than those that consider them unfavorable.

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. Market economists had forecast plus 16.

For non-manufacturers, "the government's tourism campaign subsidies as well as loosening of border controls prompted recovery in demand," said Saisuke Sakai, the chief economist at Mizuho Research & Technologies Ltd.

"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.

Sakai agreed and said that inflation, fueled by high energy costs and the weak yen, would also continue to weigh on Japan's economy.

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.

(Source: AFP with edits)

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