TOKYO : Japanese manufacturers’ sentiment likely weakened in the last quarter of 2022 on sustained cost pressures and a bleaker global economic outlook, a Reuters poll of analysts showed on Friday.
Shrinking business confidence bodes ill for the world’s third-largest economy, as firms brace for labour talks in early 2023. Wage hikes are seen as essential to revive the economy’s feeble growth.
The Bank of Japan (BOJ)’s closely-watched “tankan” corporate survey is likely to show the headline index for big manufacturers’ mood down for a fourth consecutive quarter to 6 in December from 8 in September, according to 17 economists surveyed by Reuters.
“Corporate profits are squeezed by a global economic slowdown and raw material cost hikes, despite tailwinds from a weak yen-helped improvement in exports and eased supply bottlenecks for the auto sector,” said Takumi Tsunoda, senior economist at Shinkin Central Bank Research Institute.
Meanwhile, the big non-manufacturers’ confidence index likely extended growth to 17, the highest since late 2019, from 14, as face-to-face service operators cheered Japan’s economic reopening from the pandemic, according to the poll.
No change is expected in large manufacturers’ mood three months ahead, but service-sector firms see a slight deterioration in their prospects, the poll showed.
The tankan will also show big firms plan to increase capital expenditure by 20.9 per cent in the fiscal year ending in March, slightly down from 21.5 per cent in the previous survey, the poll showed, with some analysts citing rising uncertainties over future business conditions.
The BOJ will release the survey results on Dec. 14 at 8:50 a.m. local time (Dec. 13 at 2350 GMT).
Separate trade data due on Dec. 15 at 8:50 a.m. (Dec. 14 2350 GMT) will likely show imports up 27.0 per cent and exports up 19.8 per cent year-on-year in November, slowing from the previous month’s 53.5 per cent and 25.3 per cent increases, respectively.
The trade balance is expected to stay in deficit for the 16th straight month.
The poll also showed annual wholesale inflation rate likely stayed elevated at 8.9 per cent in November, while core machinery orders, a leading indicator of business spending, likely grew 2.6 per cent month-on-month in October, the first rise in three months.
($1 = 136.2900 yen)
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