Business confidence of Japanese manufacturer’s improved for the first time in three month in March as automakers become less pessimistic despite fresh worries on surge in energy prices due to war in Ukraine, according to Reuters poll.
Service sector sentiment in Japan turned negative for the first time since October due to COVID-19 curbs and as inflation globally squeezing corporate profits, accordion to the poll which tracks Bank of Japan’s closely observed “takan” quarterly survey.
Despite manufacturers maintains positive sentiment, mangers voiced concern of downside risks for the world’s third largest economy.
“It’s a quadruple whammy,” said a machinery maker manager in the poll, referring to Russia’s invasion of Ukraine, a hit to output from Omicron infections, supply disruptions and soaring costs on everything from high-tech chips to transportation.
The Reuters Tankan manufacturers’ sentiment index rose to 8 in March from 6 last month, marking its first month-on-month improvement since December. The service-sector index extended a decline for the second month to a five-month low of minus 1, compared with the previous month’s 3.
“While demand is recovering, price hikes in energy and raw materials have made it hard to maintain profit levels,” said a paper company manager, as reported by Reuters.
In non-manufacturing, three out of six sectors saw their sentiment worsen, including real estate/construction and retailers.
According to a retail manager, extension of COVID-19 curbs has lead to lower shopper turnout and dampening sales.
The Bank of Japan will release its quarterly tankan business survey next on April 1. Besides the central bank is expected to end a two-day rate review on Friday.
