BY LEIKA KIHARA
TOKYO- Big Japanese manufacturers’ business sentiment worsened to a one-year low in the three months to March, a central bank survey showed on Tuesday, a sign escalating trade tensions were already taking a toll on the export-reliant economy.
The gloom contrasted with big non-manufacturers’ mood, which improved to levels unseen since 1991 on booming profits from inbound tourism and the pass-through of costs via price hikes.
However, both manufacturers and service-sector firms expect business conditions to stagnate or worsen three months ahead as soft global demand, rising costs and uncertainty over US tariffs cloud the outlook, the quarterly “tankan” survey showed.
The survey, compiled before US President Donald Trump’s announcement last week of a plan to impose tariffs on auto imports, highlights how external headwinds are complicating the BOJ’s decision around the timing of further interest rate hikes.
“Companies haven’t fully priced in the impact of US tariffs, which is causing a sense of alarm but not directly hitting their profits yet,” said Kazutaka Maeda, an economist at Meiji Yasuda Research Institute.
“With firms offering solid wage hikes and no major surprises coming out from the tankan, the BOJ likely won’t change its stance of steadily raising interest rates,” he said.
The headline index measuring big manufacturers’ business confidence stood at plus 12 in March, down from plus 14 in December and matching a median market forecast, the tankan survey showed. – Reuters
