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TOKYO, Dec 14 (Reuters) – Sentiment among Japanese manufacturers soured in the final quarter of 2022, a central bank survey showed on Wednesday, as persistent spending pressures and the prospect of a slowdown in global demand clouded the outlook for the world’s third-largest economy.
But sentiment in the services sector brightened in the October-December period, as the Bank of Japan’s closely-watched “Tankan” survey showed consumption slowed amid the coronavirus outbreak.
The mixed results highlight the challenges Japanese policymakers face in motivating companies to raise wages and compensate households for the cost of living – which the BOJ says is critical to sustainably hitting its 2 percent inflation target.
The headline index of major producers’ sentiment increased to 7 in December plus 8 in September, Tankan showed, a reading compared to a median market forecast of plus 6. This fell for the fourth straight quarter and marked the lowest level since. March 2021
The broad non-manufacturer confidence index rose to 19 plus 14 plus 17, beating market forecasts, the survey showed.
Both large manufacturers and producers expect business conditions to worsen three months ago, Tankan showed.
In November, core consumer prices rose 3.6% from a year earlier, the fastest pace in 40 years and exceeded the BOJ’s 2% target for a seventh straight month, as the yen’s depreciation boosted spending on already expensive fuel and food imports.
Rising spending pressures took a toll on businesses and households, leading to an annualized contraction of 0.8 percent in the third quarter.
Analysts expect growth to recover in the current quarter due to easing supply constraints and the lifting of Covid-19 border controls, although weakening global demand could cloud the outlook.
Reporting by Lika Kihara; Editing by Sam Holmes
Our standards: The Thomson Reuters Trust Principles.
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