BOJ finds worsening confidence for manufacturers
TOKYO–Confidence among Japan’s large manufacturers weakened for the third straight quarter in three months to September, a central bank survey showed Monday, reflecting concerns over the impact of trade frictions and a series of natural disasters that hit the nation in summer.
The main index measuring large manufacturers’ sentiment was at plus 19 in the July-September period, compared with plus 21 in the previous survey in June, according to the Bank of Japan’s quarterly tankan survey.
The reading was also lower than a forecast of plus 21 by economists polled by data provider Quick. The index represents the percentage of companies saying business conditions are favorable minus those saying conditions are unfavorable.
President Trump and Japanese Prime Minister Shinzo Abe agreed last week to hold talks for a bilateral trade agreement in an arrangement that exempts Japan from auto tariffs while negotiations are ongoing.
But analysts say Japan could find itself under pressure again as the negotiations are likely to take a long time.
"If the U.S. and Japan cannot agree on measures to address the persistent trade imbalance, renewed pressure from the U.S., including possibility of auto tariffs, may emerge," Citigroup economist Kiichi Murashima said in a recent research note.
The survey also showed companies remain cautious about their business plans amid growing uncertainties. Big manufacturers expect profits to fall 6.9% in the year ending March 2019. That is based on an assumption that the dollar will trade at an average of 107.40 yen this business year.
Large companies plan to increase their capital investment in the current fiscal year by 13.4%, slightly down from the plans made three months ago for a 13.6% increase.
Meanwhile, the tankan index for large non-manufacturers was plus 22 in the September survey, compared with plus 24 in the previous quarter. The reading was slightly higher than a forecast by economists for plus 23.
Write to Megumi Fujikawa at [email protected]
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