Japan’s business sentiment deteriorated in third quarter, Bank of Japan ‘tankan’ survey shows

  • Big Manufacturer Index is +8 vs f’cast +11
  • Large non-manufacturer index is +14 vs f’cast +13
  • Global slowdown casts shadow over outlook for export-reliant economy

TOKYO, Oct 3 (Reuters) – Business sentiment at Japanese manufacturers deteriorated in the three months to September, a Bank of Japan survey showed on Monday, supporting a weaker yen and its inflationary impact on business costs damaging fragile view of economic recovery.

To make matters worse, fears of a global economic slowdown have clouded the outlook for an export-reliant economy still just emerging from the coronavirus pandemic.

The Bank of Japan’s Tankan survey showed a slight improvement in service sector sentiment from three months ago, but optimism among retailers declined as higher commodity prices led to higher living costs and a weaker yen boosted import prices.

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The quarterly survey showed that the overall index for large manufacturers deteriorated to a positive 8 in September from a positive 9 in June, compared with a median forecast of a positive 11.

The large non-manufacturing index came in at a positive 14 in September, up from a positive 13. Compared to the median market forecast of 13.

The country’s large manufacturers expect business conditions to improve over the next three months, while sentiment among large non-manufacturers will deteriorate, the survey showed.

Japan’s economy grew at an annualized rate of 3.5% in the second quarter as the lifting of COVID-19 restrictions boosted consumption. But many analysts expect growth to slow in the third quarter as slowing global demand and rising raw material prices weigh on exports and consumption.

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Reporting by Leika Kihara and Tetsushi Kajimoto; Editing by Sam Holmes

Our Standard: The Thomson Reuters Trust Principles.

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