Japan’s manufacturers’ sentiment weighed by overseas risks – Reuters Tankan
TOKYO : Business morale at large Japanese manufacturers was subdued in October, although the services-sector mood edged up, the Reuters Tankan poll showed, as upbeat domestic demand helped partly offset the hit to the economy from global headwinds.
The prospect of higher U.S. interest rates has weakened the Japanese yen, hurting the country’s terms of trade, while concerns about a spike in oil prices are also weighing on sentiment.
All in all, downside risks from the global economy have sapped confidence in Japan’s trade-reliant economy, which is otherwise gradually recovering from the pandemic with tourists from China and elsewhere returning.
The Reuters poll, which tracks the Bank of Japan’s (BOJ) closely watched tankan quarterly survey, saw manufacturers’ mood flat at +4 index points in October, although it was expected to inch up over the coming three months.
The service-sector index rose to +24, slightly improving from +23 from the previous month, according to the survey conducted Sept. 27 to Oct. 6. Underscoring the fragility of corporate morale, the sentiment index was seen falling to +20.
“Our business conditions are not so good, because there’s a divide among those who benefit from recovery in car production and those who suffer from China’s overall economic slowdown,” an industrial ceramic maker manager wrote.
“Uncertainty around the outlook is high,” the manager added.
In the Reuters poll of 502 large- and mid-sized companies, in which 249 firms responded, many complained about the rising cost of doing business due to surging raw materials prices that were aggravated by a weak yen. The respondents spoke on the condition of anonymity.
The BOJ’s tankan out on Oct. 2 found Japan’s business sentiment improved in the third quarter, suggesting conditions for a durable economic revival are falling into place even as a global slowdown keeps policymakers cautious about the outlook.
The Reuters Tankan indexes are calculated by subtracting the percentage of pessimistic respondents from optimistic ones. A positive reading means optimists outnumber pessimists.
