BANGKOK (AP) – A quarterly survey by Japan’s central bank shows business sentiment has improved slightly, especially in major heavy industries such as automaking, fossil fuels and machinery, while services industries were less upbeat.
The survey released yesterday by the Bank of Japan (BoJ), called the tankan, might influence the central bank’s decision on whether to raise its benchmark interest rate next week. It shows the difference between companies saying they are optimistic about business conditions and those that are pessimistic.
The latest survey’s outcome undermined expectations for a rate hike, and the Japanese yen weakened, with the US dollar trading at JPY152.90 yesterday, near its highest level in two weeks. Meanwhile, the benchmark Nikkei 225 stock index fell more than one per cent.
“Expectations are for the BoJ to maintain its short-term interest rate at 0.25 per cent next week, marking the fourth consecutive meeting with no change,” IG said in a commentary.
Japan’s economy grew at a revised 1.2 per cent annual pace in the last quarter, helped by sustained consumer spending. But the outlook ahead is uncertain, IG economists noted, given US President-elect Donald Trump’s vows to impose higher tariffs on imports from many countries, which could jolt both the regional and the global economy.
“The mediocre increase in business conditions across all firm sizes in the latest tankan suggests that activity is unlikely to rebound meaningfully this quarter, following a slowdown in (the last quarter),” Toh Au Yu of Capital Economics said in a commentary.
One of the biggest obstacles for Japanese firms is a severe labour shortage as the work force shrinks along with the overall population, Toh said.
The tankan showed a negative 36 sentiment for employment, unchanged from the previous quarter. Still, overall business sentiment for both manufacturers and non-manufacturers edged up to 15 from 14 in the previous survey.
The sentiment index for large manufacturers rose to 14 in December from 13 in September, partly due to automakers resuming production following certification scandals in the industry.
Construction and real estate also improved.
But while automakers and other big industries gained ground, sentiment among retailers and other service industries deteriorated, falling to 33 from 34, though it remained in positive territory.
The index for retailers dropped sharply, to 13 from 28.