Disappointing Economic Data Releases Spell More Trouble Ahead for Japan

Disappointing Economic Data Releases Spell More Trouble Ahead for Japan

Posted Wednesday, May 20, 2020 by
Arslan Butt • 1 min read

The latest edition of the Reuters Tankan survey indicates that business confidence continues to decline among Japanese businesses as a result of the coronavirus pandemic. The business sentiment index among manufacturers fell sharply to -44 in May from -30 during April, while the sentiment among the services sector worsened to -36 from -23 for the same period.

With Japan already experiencing a recession even before the full effect of the pandemic has hit the economy, the data spells more trouble for the economy in the coming months. The outlook among both manufacturing as well as services sectors companies in the country is getting bleaker, with both sectors expecting the business sentiment to fall even more in the coming three months.

Meanwhile, core machinery orders also posted a decline for the month of March as the coronavirus outbreak prompted hit Japan. According to data released by the Cabinet Office, core machinery orders fell by 0.4% in March after rising by 2.3% during the previous month, but came in better than economists’ forecast for a sharper decline by 7.1%.

Core orders among manufacturers was down by 8.2%, but increased by 5.3% in the services sector. Core orders in the services sector rose as a result of an 82% increase in orders from the transportation and postal sub-sectors.

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