Confidence among Japan’s biggest manufacturers has plunged into negative territory for the first time in seven years, a key survey showed yesterday as the COVID-19 pandemic hits demand and disrupts production.
The Bank of Japan’s Tankan business survey — a quarterly poll of about 10,000 firms — last month showed a reading of minus-8 among major manufacturers, the first negative reading since March 2013.
The short-term business sentiment survey reports the difference between the percentage of firms that are upbeat and those that see conditions as unfavorable.
Photo: AP
A negative reading means more firms are pessimistic than optimistic. It is considered to be the broadest indicator of how Japan Inc is faring.
The index for non-manufacturers fell to plus-8 from 20 in December last year survey as the virus also hit tourism, entertainment and other service industries.
The confidence index for the hotels and restaurant service industry came in at a staggering minus-59.
“Negative impacts are spreading broadly in various sectors,” NLI Research Institute senior economist Tsuyoshi Ueno said in a report ahead of the Tankan release.
They range from slower exports and the disruption of parts supply from China, to plunges in foreign visitors, cancelations of sports and other events, and weaker stock prices combined with a higher yen, he said.
The headline index was also at the lowest level since March 2013 just before the central bank embarked on unprecedented massive monetary easing in tandem with then-new Japanese Prime Minister Shinzo Abe’s pro-spending policy, known as Abenomics.
Norinchukin Research Institute chief economist Takeshi Minami said the reading was the same last month and in March 2013, but the direction was “totally different.”
“Back in March 2013, negative sentiment was receding on hopes for ‘Abenomics,’ but the situation is far more serious this time,” he said. “There are increasing risks that confidence will sink further now.”
The world’s third-largest economy is “bound to fall” into a recession, Minami said. “The problem is nobody knows how long these woes will last, hitting business confidence hard.”
Sumitomo Mitsui Trust Holdings Inc senior economist Naoya Oshikubo said that “the postponement of the Tokyo Olympics can be seen as the emblem of the great sense of uncertainty about the future, felt across Japan and the world, which is slowing demand.”
However, economists said the gloomy Tankan report is unlikely to push the Bank of Japan into taking new easing measures soon.
The bank had already brought forward its last policy meeting and decided on additional easing measures on March 16.
“It would be a different story if the yen appreciates rapidly ... but otherwise the bank is expected to maintain a wait-and-see stance for a while, given the little room it has for further easing,” Ueno said.
Japan has reported fewer infections and death than other major economies, but authorities have warned the nation is at crossroads to prevent an explosive rise in cases.
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
EUROPE ON HOLD: Among a flurry of announcements, Intel said it would postpone new factories in Germany and Poland, but remains committed to its US expansion Intel Corp chief executive officer Pat Gelsinger has landed Amazon.com Inc’s Amazon Web Services (AWS) as a customer for the company’s manufacturing business, potentially bringing work to new plants under construction in the US and boosting his efforts to turn around the embattled chipmaker. Intel and AWS are to coinvest in a custom semiconductor for artificial intelligence computing — what is known as a fabric chip — in a “multiyear, multibillion-dollar framework,” Intel said in a statement on Monday. The work would rely on Intel’s 18A process, an advanced chipmaking technology. Intel shares rose more than 8 percent in late trading after the
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure
RSS