Tokyo, Sept. 24 (Jiji Press)–An upcoming Bank of Japan “tankan” survey report is expected to show deterioration in manufacturing sentiment for the third straight quarter, according to latest projections by 15 think tanks.
The headline diffusion index for business sentiment among large manufacturers is projected at plus 2 on average for the September report due out Oct. 1, down 5 points from the June report.
The weak forecast apparently reflected further falls in production and exports on the back of the prolonged trade friction between the United States and China as well as the yen’s rising.
All of the 15 think tanks surveyed by Jiji Press projected deterioration in the DI for large manufacturers.
Many of them also predicted that uncertainties over the global economy are expected to continue dampening business sentiment.
The DI for large nonmanufacturers is forecast at plus 20, down 3 points, after they were supported by strong consumption in the previous quarter thanks to the effects from the unprecedented 10-day Golden Week holiday period from late April to early May.
A fall in the number of South Korean visitors to Japan due to the deterioration in the bilateral relationships is also likely to have negatively affected nonmanufacturers’ sentiment.
As for outlooks, some think tanks projected that business sentiment will likely deteriorate further due to an expected slump in domestic demand after the consumption tax increase to 10 pct on Oct. 1 from the current 8 pct.
Capital expenditures planned by large manufacturers and nonmanufacturers for fiscal 2019 that started in April are projected to increase 7.0 pct from the previous year, down 0.4 percentage point from the previous survey.
“A cautious stance is becoming stronger among manufacturers” as they are increasingly concerned about the course of the global economy, while capital expenditures are seen to be supported by investment in labor-saving technologies amid labor shortages, said Akane Yamaguchi, researcher at the Daiwa Institute of Research.