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.
KEEPING UP: The acquisition of a cleanroom in Taiwan would enable Micron to increase production in a market where demand continues to outpace supply, a Micron official said Micron Technology Inc has signed a letter of intent to buy a fabrication site in Taiwan from Powerchip Semiconductor Manufacturing Corp (力積電) for US$1.8 billion to expand its production of memory chips. Micron would take control of the P5 site in Miaoli County’s Tongluo Township (銅鑼) and plans to ramp up DRAM production in phases after the transaction closes in the second quarter, the company said in a statement on Saturday. The acquisition includes an existing 12 inch fab cleanroom of 27,871m2 and would further position Micron to address growing global demand for memory solutions, the company said. Micron expects the transaction to
Vincent Wei led fellow Singaporean farmers around an empty Malaysian plot, laying out plans for a greenhouse and rows of leafy vegetables. What he pitched was not just space for crops, but a lifeline for growers struggling to make ends meet in a city-state with high prices and little vacant land. The future agriculture hub is part of a joint special economic zone launched last year by the two neighbors, expected to cost US$123 million and produce 10,000 tonnes of fresh produce annually. It is attracting Singaporean farmers with promises of cheaper land, labor and energy just over the border.
US actor Matthew McConaughey has filed recordings of his image and voice with US patent authorities to protect them from unauthorized usage by artificial intelligence (AI) platforms, a representative said earlier this week. Several video clips and audio recordings were registered by the commercial arm of the Just Keep Livin’ Foundation, a non-profit created by the Oscar-winning actor and his wife, Camila, according to the US Patent and Trademark Office database. Many artists are increasingly concerned about the uncontrolled use of their image via generative AI since the rollout of ChatGPT and other AI-powered tools. Several US states have adopted
A proposed billionaires’ tax in California has ignited a political uproar in Silicon Valley, with tech titans threatening to leave the state while California Governor Gavin Newsom of the Democratic Party maneuvers to defeat a levy that he fears would lead to an exodus of wealth. A technology mecca, California has more billionaires than any other US state — a few hundred, by some estimates. About half its personal income tax revenue, a financial backbone in the nearly US$350 billion budget, comes from the top 1 percent of earners. A large healthcare union is attempting to place a proposal before
RSS