Confidence has been falling among major manufacturers since April – Copyright AFP Yuichi YAMAZAKI
Business confidence fell slightly among Japan’s biggest manufacturers for the fourth straight quarter, a Bank of Japan survey showed on Wednesday.
However, optimism grew among non-manufacturers and both readings exceeded market expectations.
The BoJ’s quarterly Tankan survey, considered the broadest indicator of how Japanese companies are faring, 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, slightly down from plus eight three months earlier.
A positive number means that more manufacturers view trading conditions as favorable than those who view them as unfavorable.
Economists had forecast another six for Wednesday’s reading.
“Weak demand in overseas markets, including China, which has been hit by its zero-covid policy, has been a hurdle for manufacturers,” said chief economist Saisuke Sakai of Mizuho Research & Technologies, told AFP.
The reading has been falling since April after nearly two years of improving confidence, which had plunged to minus 34 in June 2020 when Covid-19 restrictions hit the economy.
Among large non-manufacturing companies, business confidence improved to 19 from a previous reading of 14, Tankan showed. Market economists had forecast another 16.
For non-manufacturers, “subsidies from the government’s tourism campaign, as well as the relaxation of border controls, fueled the recovery in demand,” Sakai said, noting that recent indicators showed a strong recovery in consumption.
“Overall, the economy is not in bad shape, but going forward, the prospect of a global economic slowdown is a risk,” said Shinke Yoshiki, chief economist at the Dai-ichi Life Research Institute.
Sakai agreed, saying inflation, fueled by high energy costs and a weak yen, would also continue to weigh on Japan’s economy.
Inflation hit a four-decade high of 3.6 percent in October, increasing pressure on Japan’s central bank to back away from its ultra-loose monetary policies.
In October, the government pledged to spend $260 billion on a stimulus package to shield the economy from the impact of inflation and the falling yen.