TOKYO – Business sentiment among large Japanese companies in the January-March period fell to the lowest level in five years and nine months, affected by the new coronavirus outbreak and slowing exports to China, a government survey showed Thursday.
The confidence index covering firms capitalized at 1 billion ($9.6 million) or more stood at minus 10.1 in the first three months of 2020, down from minus 6.2 in the previous quarter for the second consecutive quarterly decline, according to the joint survey by the Finance Ministry and Cabinet Office.
The index hit its lowest point since it logged minus 14.6 in the April-June quarter of 2014, following the consumption tax hike from 5 percent to 8 percent on April 1 that year.
The index is calculated by subtracting the percentage of firms reporting worsening conditions from those observing improvements.
The survey covered 14,057 companies capitalized at 10 million yen or more, of which 11,413, or 81.2 percent, responded as of Feb. 15.
A government official told reporters the impacts of the coronavirus outbreak “had already begun appearing” when the survey was conducted, referring to disrupted supply chains and a series of cancellations at hotels and restaurants as factors in worsening business sentiment.
By sector, the large manufacturers’ index was minus 17.2, the lowest since minus 23.3 in the April-June period in 2011, following the massive earthquake and tsunami that hit northeastern Japan in March that year.
Notable declines were seen in sentiment of sectors including fabricated metal and chemicals due to sluggish exports of petrochemical products and auto parts to China, according to the official.
As for the export slump, the official cited the influence of the virus spread, which has been “disrupting supply chains,” along with the remaining negative effects from a tit-for-tat tariff war between China and the United States.
The index for large nonmanufacturers stood at minus 6.6, due to lackluster sales at wholesalers, hotels and restaurants hit hard by the virus outbreak.
The index for small firms capitalized at 10 million yen or more but less than 100 million yen nosedived to minus 25.3 for the reporting quarter on an all-industry basis, the worst since minus 41.1 in the April-June period of 2011.
For midsize companies capitalized at 100 million yen or more but less than 1 billion yen, the index stood at minus 13.1.
Looking forward, the index forecasting business conditions for large companies in the three months through June stood at minus 4.4, while that for the following quarter came to plus 4.2.