Japanese business confidence dips in August – survey

Japanese business confidence softened in August, according to the Reuters Tankan survey released on Wednesday, as weakening demand from China and rising economic uncertainties weighed on sentiment.

The survey’s index for manufacturers slipped to 10 in August from 11 in July, marking a decline in optimism. Manufacturers anticipate a further downturn to 5 in the next three months. Automakers, in particular, reported sluggish sales in China, a key market.

Beyond the auto industry, companies across sectors, including chemicals, steel, and electronics machinery, expressed concerns over subdued Chinese demand. Additionally, rising inflation and volatile global markets added to the challenges faced by businesses.

The Reuters Tankan service-sector index dropped to 24 in August from 26 in July, marking a second consecutive decline. Non-manufacturers anticipate a rebound to 26 in November, supported by strong inbound demand boosting sector confidence.

The Reuters Tankan survey, which closely tracks the Bank of Japan’s quarterly survey, was conducted between July 31 and August 9. It polled 506 large non-financial firms, with 243 responding anonymously.

Attribution: Reuters

Subediting: M. S. Salama