Tokyo, Dec. 13 (Jiji Press)–Business sentiment among large manufacturers in Japan has stayed flat in recent months, capped by parts shortages and higher raw material prices, the Bank of Japan’s latest “tankan” survey showed Monday.
In the quarterly survey for December, the headline diffusion index for large manufacturers’ current business conditions stood at plus 18, unchanged from the previous September survey and matching the average forecast by 20 economic research institutes in a Jiji Press poll.
Meanwhile, the DI for large nonmanufacturers jumped to plus 9 from plus 2, after the government lifted a state of emergency over the coronavirus pandemic. The index rose for the sixth straight quarter, hitting the highest level since December 2019, before the coronavirus crisis.
The DI represents the percentage of companies seeing good business conditions minus those feeling the opposite.
Over the next quarter, both manufacturers and nonmanufacturers are bracing for their business conditions to worsen, due partly to the emergence of the omicron variant of the coronavirus, as well as rising material prices, the December survey suggested.
The business outlook DI stood at plus 13 for large manufacturers and plus 8 for large nonmanufacturers.
While the survey was conducted between Nov. 10 and Friday, it is believed to have not fully reflected the impact of the omicron variant as nearly 80 pct of its respondents gave responses by Nov. 29.
Capital spending in fiscal 2021 is forecast to rise 9.3 pct from the previous year at large companies in the manufacturing and nonmanufacturing sectors.
Reflecting soaring material prices, the index for input prices at large manufacturers stood at the highest level since the September 2008 survey, and that for output prices at the highest level since the August 1980 survey.
Among large manufacturers, automakers logged minus 8 in the current condition DI, down from minus 7, and others including steelmakers, chemical makers and nonferrous metals producers also posted worse figures.
A wide range of large manufacturers were affected by supply-side constraints including shortages of semiconductors and other components, as well as resulting production cuts by automakers.
Nonetheless, production machinery and electrical machinery makers saw their business conditions improve, thanks to strong demand related to information technology.
For small manufacturers, the current condition DI stood at minus 1, against minus 3 in the September tankan, improving for the sixth quarter in a row.
Among large nonmanufacturers, the DI sharply improved to minus 50 from minus 74 for the hotel and restaurant industry and to minus 9 from minus 45 for providers of services for individuals, including golf course and theme park operators.
Small nonmanufacturers posted the first improvement in the DI, to minus 4 from minus 10, in two quarters.