Business confidence fell among Japan’s biggest manufacturers for a third straight quarter, a closely watched survey showed yesterday, defying analysts’ expectations for a rise in sentiment.
The Bank of Japan’s Tankan survey showed major manufacturers are far more optimistic than during the darkest days of the COVID-19 pandemic.
However, inflation, including rising energy prices fueled by the war in Ukraine, has weighed on business confidence this year, analysts said.
The quarterly survey, seen as the broadest indicator of the situation for Japanese businesses, showed confidence among major manufacturers at plus eight, down slightly from the previous reading of plus nine.
A positive number means that more manufacturers consider the trade conditions favorable than those who consider them unfavorable.
The reading has been falling since April after nearly two years of improving sentiment, which plunged to minus-34 in June 2020 as COVID-19 restrictions hit the economy.
“While soaring material and energy prices continued to weigh on the business climate, a reduction in the supply crisis due to the lifting of Shanghai’s lockdowns would provide a boost,” said NLI Research Senior Economist Tsuyoshi Ueno yesterday ahead of the survey’s release.
Among large non-manufacturers, business confidence improved slightly to 14 from a previous reading of 13, the Tankan showed.
Inflation in Japan hit a seven-year high of 2.8% in August for non-fresh food items, although the figure is much lower than in many other countries.
The yen also hit a 24-year low against the US dollar in recent weeks, prompting intervention last month from the government, which is also preparing another round of stimulus to boost the world’s third-largest economy.
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