Japanese business sentiment dropped for the 2nd straight quarter in June amid rising costs for energy and raw materials and supply disruptions caused by China lockdown, the Bank of Japan (BOJ) said in its Tankan report Friday.
The Tankan’s headline index, which measures the mood of big manufacturers, fell to plus 9 in June from plus 14 in March, the lowest level since March 2021. By comparison, the median market forecast was about a 13 point gain.
BOJ said that rising raw material costs, supply shortage resulting from lockdown in China’s key financial hub Shanghai, and auto production reduction were among the factors listed by manufacturers as hurting their operations.
Sentiment has also been hampered by the yen’s recent weakness against major currencies, including the U.S. dollar and the euro, which has increased the cost to import raw materials.