Business confidence fell slightly among Japan`s largest manufacturers for the fourth straight quarter, a closely watched Bank of Japan 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 favourable than those that consider them unfavourable.
Economists had forecast plus six for Wednesday`s reading. "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. 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," Sakai said, noting that recent indicators showed a solid recovery in consumption. "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, fuelled 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.
JH
