Japan’s business sentiment hit its worst level in more than two years in January-March, a closely watched central bank survey showed on Monday, as slowing global growth clouded the outlook for the export-reliant economy.
By contrast, service-sector sentiment, easing border controls and the end of COVID-19 restrictions boosted hopes for a return to tourism and consumption, the Bank of Japan’s Tankan survey found.
The central bank will scrutinize the survey as a key input in formulating new quarterly growth and inflation estimates at its next meeting on April 27-28 – the first to be chaired by incoming governor Kazuo Ueda.
A headline index measuring sentiment at major manufacturers fell to plus 1 in March from plus 7 in December, Bank of Japan (BOJ) data showed, worse than a median market forecast for a plus 3 reading. It was the fifth consecutive quarterly decline and the worst level hit since December 2020.
Sentiment for a broad sector of manufacturers has worsened, with many firms complaining of the impact of rising raw material and fuel costs, as well as slowing overseas growth and declining chip demand, BOJ officials said at a briefing.
An index of major non-manufacturers rose for the fourth quarter to plus 20 from plus 19 in December, matching a median market forecast, the survey showed, as hopes of a rebound in demand for tourism and services lifted spirits among retailers and hotels.
