Confidence at major Japanese manufacturers marked its sharpest drop in 34 years, a key central bank survey showed yesterday, further evidence that the world’s second-largest economy may be headed for a deep recession as companies brace for more global turbulence.
The Bank of Japan’s tankan quarterly survey for this moth showed that its closely watched confidence index for large manufacturers at minus 24 — the steepest fall since February 1975.
That figure is the lowest level in since March 2002, when the index hit minus 38.
Japan Inc has grown increasingly pessimistic in the last the last three months amid slumping global demand, with major exporters including Sony Corp and Toyota Motor Corp slashing production, jobs and profit expectations. The yen’s surge to a 13-year high on Friday only adds to the pain by eroding exporters’ overseas earnings.
The latest number, largely in line with economists’ dire forecasts, was far worse than the minus 3 reading September survey.
The figure represents the percentage of companies saying business conditions are good minus those saying conditions are unfavorable.
The lower the number, the greater the pessimism.
“The result confirms that the economic downturn has gathered momentum,” said JP Morgan economist Miwako Nakamura, who highlighted that confidence fell more sharply among automakers.
Merrill Lynch economist Takuji Okubo said it was unlikely that the central bank would cut its key interest rate — already super-low at 0.3 percent — because that would discourage banks from lending.
The Bank of Japan’s (BOJ) policy board begins a two-day meeting starting Thursday.
“So as interest rates gets close to zero, there is really no incentive for people to trade in the money market,” he said. “So that’s why BOJ wants to keep at least some interest so that people keep trading.”
Instead, the Bank of Japan is likely to take other steps to pump more cash into the system to ease the growing credit crunch reflected in yesterday’s data, he said.
Major manufacturers in the latest tankan reported far tighter bank lending conditions from three month ago, with the index measuring lending attitudes down to minus 4 from 13.
The tankan survey — which polls more than 10,000 businesses — showed that decline in confidence hit small and medium-size companies even harder. Sentiment among small manufacturers and small non-manufacturers both tumbled to minus 29.
The confidence index for major non-manufacturers deteriorated to minus 9 from positive 1 in the September survey.
The central bank survey also showed that large companies downgraded their capital spending plans and now expect to cut expenditures by an average 0.2 percent in the fiscal year through next March.
Companies expect business conditions to deteriorate further in the months ahead.
The sentiment index for big manufacturers is forecast to drop to minus 36 in the next survey in April, while the figure for large non-manufacturers will likely fall to minus 14, the tankan showed.
Still, business sentiment remains above the lows hit during Japan’s previous recession, when the large manufacturers’ index plunged to minus 51 in December 1998.
Managers also said they expect an average dollar value of ¥103.32 (US$1.14) during the fiscal year, slightly higher than their previous estimate of ¥102.82.
On Friday, the dollar fell as low as ¥88.16, its lowest level since August 1995. Yesterday, the dollar was trading at ¥90.81.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last
US CONSCULTANT: The US Department of Commerce’s Ursula Burns is a rarely seen US government consultant to be put forward to sit on the board, nominated as an independent director Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday nominated 10 candidates for its new board of directors, including Ursula Burns from the US Department of Commerce. It is rare that TSMC has nominated a US government consultant to sit on its board. Burns was nominated as one of seven independent directors. She is vice chair of the department’s Advisory Council on Supply Chain Competitiveness. Burns is to stand for election at TSMC’s annual shareholders’ meeting on June 4 along with the rest of the candidates. TSMC chairman Mark Liu (劉德音) was not on the list after in December last