Japanese manufacturers show high confidence in June – poll

Japanese manufacturers showed increased confidence in business conditions in June, while those in the service sector were less optimistic, according to the monthly Reuters Tankan survey. This reflects a mixed economic outlook.

The survey of 506 large non-financial firms comes ahead of the Bank of Japan’s (BOJ) policy review on July 30-31.

The central bank will closely monitor its own tankan survey and other data for signs of sustained inflation and strong household consumption supported by wage increases, which could justify further rate hikes.

The Reuters Tankan, known for its close alignment with the BOJ’s Tankan, revealed a positive sentiment index of +11 for manufacturers.

This marks five points increase compared to June and signifies the first improvement in producer confidence in four months. However, manufacturers anticipate the index to dip slightly to +10 over the next quarter.

Domestic price hikes have dampened consumer spending, noted a manager at a chemical manufacturing company, responding anonymously to the Reuters poll conducted between July 2nd and 12th.

Another respondent, a manager from a food processing company, said that weak yen has driven up input prices, which remain elevated, and that they were facing difficulties in passing on these costs to consumers.

The Reuters Tankan service-sector index fell to +26 in July, down from +31 in June. This marks the first decline in the service sector’s confidence level in three months. Looking ahead, non-manufacturers project the index to reach +27 by October.

Attribution: Reuters