TOKYO- Business confidence levels of Japanese manufacturers and service sector firms were little changed in June from the prior month, highlighting the fragile and uneven state of the country’s coronavirus recovery, a Reuters survey showed.
While manufacturers’ mood remained positive thanks to strong overseas demand, it was forecast to be slightly lower three months from this month, according to the Reuters Tankan poll, which tracks the Bank of Japan’s (BOJ) closely watched tankan quarterly survey.
The Reuters Tankan sentiment index for manufacturers edged up to 22 from 21 in May, while the mood in the service sector was more dour. The service index was flat, down from 2 the prior month, the poll conducted June 3-14 showed.
The Reuters Tankan index readings are calculated by subtracting the percentage of respondents who say conditions are poor from those who say they are good. A positive reading means optimists outnumber pessimists.
Among manufacturers, buoyant sentiment at chemical and metal product makers offset less favorable conditions in sectors such as textiles and paper, according to the survey of 481 large- and mid-sized companies, in which 238 firms responded on condition of anonymity.
“We’re seeing a positive impact from growing overseas demand and in electronic materials-related industries,” a manager at a chemical products maker said.
The poll comes a day before the BOJ is set to end a June 17-18 policy meeting where it may extend its pandemic-relief programs to support the country’s economic recovery, which would help solidify the view it will lag other central banks in cutting crisis-mode policies.
The BOJ’s own “tankan” business survey is next due on July 1, weeks before Tokyo is set to host the Olympic Games later that month amid ongoing concerns the event could fuel a spike in COVID-19 infections. – Reuters
Japan’s economy is expected to narrowly avoid falling into recession this quarter, but is unlikely to see the sharp growth rates of the United States, largely due to extended coronavirus curbs and Tokyo’s late vaccine rollout. – Reuters
