Japan’s Manufacturers Turn More Optimistic About Business Conditions
Arslan Butt • 1 min read
Japan’s manufacturing companies are turning more optimistic about economic conditions improving in the coming year, with business confidence surging to the highest levels seen in over two years during April. The Japanese manufacturers’ Reuters Tankan sentiment index surged from 6 in March to 13 in April, the highest reading seen since February 2019.
Business confidence among services sector firms in the world’s third largest economy has also improved, although it still stays in the negative territory indicating pessimism. The services sector index rose from -5 in March to -3 in April, remaining in contraction for the 14th straight month.
Business confidence among manufacturers posted a sharp increase over a pick-up in demand for electronics goods driving a global shortage for chips even as the exchange rate encouraged hopes for rising external demand. Meanwhile, the services sector outlook remains pessimistic due to restrictions in place keeping consumers away.
Manufacturing companies’ sentiment has picked up even as the BOJ eased its control on long-term interest rates in March and hinted at starting to taper off its massive asset purchase program over encouraging signs of economic recovery. However, businesses surveyed highlighted some challenges in procuring key raw materials and intermediate goods essential for production.