Japanese manufacturers’ mood at 6-month low in October – Reuters

TOKYO, Oct. 13 (Reuters) – Japanese manufacturers have become less positive about economic conditions as the outlook for the services sector has improved to levels not seen since the start of the coronavirus pandemic, the Reuters poll showed October tankan.

Manufacturers were the least optimistic in six months as the mood in the service sector remained in contraction as the Japanese economy grappled with the impact of a global chip shortage and soaring material costs raw.

The monthly poll, which tracks the Bank of Japan’s (BOJ) quarterly tankan survey, found that confidence is likely to remain positive for manufacturers and rise sharply for non-manufacturers over the next three months.

The survey of 503 large and medium-sized companies conducted from September 29 to October 8, of which 267 responded, showed a mixed picture, with some companies struggling to get rid of the pandemic trail while others were benefiting from it. strong global demand.

“Although business has not returned to what it was before the coronavirus, the worst of the pandemic has passed and conditions are on a recovery trend,” said an official at a precision machinery manufacturer .

The Reuters Tankan Confidence Index for Manufacturers fell to 16 in October from 18 a month earlier – its lowest since April – while the Services Index fell from minus 2 to minus 1.

(For a detailed table of results, click)

The BOJ’s latest survey of tankan companies for July-September, released this month, here showed that the trading mood of major manufacturers has improved for a fifth consecutive quarter, with manufacturers recovering from global demand. robust.

The Reuters Tankan showed that companies were suffering from soaring commodity and energy prices, which are weighing on the profit margins of companies in the world’s third-largest economy.

“Food spending is starting to slow,” wrote an official at a food manufacturer in the survey.

“As commodity prices rise, this is not reflected in selling prices, as the deflationary consumer mindset remains strong. “

Japan’s wholesale inflation rate hit a 13-year high in September, with rising global commodity prices and a weak yen pushing up import costs, BOJ data showed on Tuesday. , posing a risk to the economic outlook.

Reuters ‘Tankan showed that the global shortage of chips and parts is weighing heavily on carmakers’ trading conditions, especially among automakers, with the auto / transportation equipment sector falling to -31 in October from -14 in September.

“The demand for semiconductor-related products is strong, but we are affected by production cuts in automakers and companies making factory machinery,” said an official at a rubber manufacturer.

Others, such as steelmakers, have also said they are seeing their orders dwindle due to the semiconductor shortage. (Reporting by Daniel Leussink; Additional reporting by Kantaro Komiya; Editing by Christopher Cushing)

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