TOKYO, JAPAN — Confidence among Japan’s largest manufacturers rose as business conditions have improved for the first time in seven quarters, a key survey showed Monday.
The Bank of Japan’s closely watched quarterly Tankan survey is considered the broadest indicator of how Japanese businesses are faring.
It reports the difference between the percentage of firms that are upbeat and those that see conditions as unfavourable.
A positive figure means more businesses feel optimistic than pessimistic. Among major manufacturers, business confidence rose to plus five from plus one three months earlier.
The reading came after the fifth quarterly drop in sentiment and an unchanged figure in December 2021, and beat market expectations of plus three.
Optimism also grew slightly among non-manufacturers, from plus 20 to plus 23, against market expectations of plus 22.
The better-than-expected large manufacturer confidence was due to “improvement in the auto sector, which reflected an easing chip shortage and a lull in import price rises thanks to falling fuel costs,” Tsuyoshi Ueno, senior economist at NLI Research Institute, told AFP ahead of the data release.
Improvement in confidence among non-manufacturers reflects recovery in the service sector after the lifting of Covid-related regulations and a recovery in inbound tourism, he said.
Looking ahead, the survey “will likely weaken slightly over a potential worsening in the US and European economies following central bank rate hikes and a delay in the recovery of the Chinese economy.”
The latest reading “could be a factor in encouraging the BoJ to tweak” a policy tool known as the yield curve control, which sets the band in which rates for 10-year government bonds fluctuate, he said.
But he expected no change in this month’s policy meeting, “as there is no reason for the BoJ to rush.”
Ueno and most other observers also expect the Bank of Japan to stick to its long-standing, ultra-loose monetary policy for the time being, in an attempt to boost economic growth.
The BoJ’s two-percent inflation target, which it hopes will lead to sustainable growth in the world’s third-largest economy, has been surpassed every month for more than a year.
But the central bank sees recent price rises as driven by temporary factors, and so has stuck to easing policies such as a negative interest rate.
— AFP
