Japan’s next quarterly survey will likely show its big manufacturers were less pessimistic than they were in the June quarter, when business sentiment struck an 11-year low following a nationwide lockdown due to the coronavirus outbreak.
Fourteen economists polled by Reuters forecast the Bank of Japan’s quarterly tankan business sentiment survey would show the headline index for big manufacturers’ confidence at minus 23 in September, improving from minus 34 in June as sentiment began recovering after a nationwide lockdown was eased.
The June index was the weakest since June 2009, when the economy was in the throes of the Global Financial Crisis.
The sentiment index for big non-manufacturers is expected to have recovered to minus 9 in September from minus 17 marked in June survey, which was the worst reading since December 2009, according to the Reuters poll.
“Demand recovery after social and economic activities restarted in Japan and overseas helped business sentiment to improve in broad industries,” said Akane Yamaguchi, economist at Daiwa Institute of Research.
The Reuters poll showed sentiment among both big manufacturers and non-manufacturers over the outlook was likely to remain subdued.
Big manufacturers’ business confidence is expected to recover somewhat to minus 17 in the coming quarter, and non-manufacturers’ sentiment is forecast to remain at minus 9, the poll found.
“The pace of recovery in business sentiment is expected to be limited as coronavirus prevention steps remain in place and concerns over a
resurgence in the cases continue to be strong,” Yamaguchi said.
Big companies will likely raise their capital spending plans by 1.3% for this fiscal year to March 2021, revising down from 3.2% projected in the June survey.
“Companies will stay cautious as corporate earnings have worsened due to the spread of the coronavirus infection and it is uncertain how the situation will develop,” aid Kenta Maruyama, an economist at Mitsubishi UFJ Research and Consulting.