BANGKOK (AP) — While business confidence has improved slightly, particularly in key heavy industries such as car manufacturing, fossil fuels and machinery, the service industry was less optimistic, according to a quarterly survey by Japan’s central bank.
The results of a survey called the Tankan released by the Bank of Japan on Friday could influence the bank’s decision on whether to raise the benchmark interest rate next week. This shows the difference between companies that are optimistic about the economy and those that are pessimistic.
The latest survey results hurt expectations for a rate hike, and the Japanese yen weakened, with the dollar trading at 152.90 yen on Friday, near a two-week high. Meanwhile, the benchmark Nikkei 225 stock index fell more than 1%.
“The Bank of Japan is expected to keep short-term interest rates at 0.25% next week, the fourth consecutive meeting to do so,” IG said in a commentary.
Japan’s economy grew at a revised annual rate of 1.2% in the last quarter, supported by sustained consumer spending. However, the IG’s economists noted that the outlook is uncertain given the statements made by the next U.S. president. donald trump’s It has pledged to impose high tariffs on imports from many countries, which could send shockwaves through both the local and global economies.
“The mediocre improvement in business conditions for companies of all sizes in the latest Tankan suggests that activity has picked up significantly this quarter, following a slowdown[in the previous quarter],” said Capital Economics’ To Au Yu in a commentary. This suggests that it is unlikely.”
Mr. To said one of the biggest obstacles for Japanese companies is the severe labor shortage as the working population is shrinking along with the total population. In the Tankan, business confidence regarding employment was -36, unchanged from the previous quarter.
Still, overall business confidence in manufacturing and non-manufacturing industries rose slightly from 14 in the previous survey to 15.
The sentiment index for major manufacturers rose from 13 in September to 14 in December, partly due to the influence of automakers. resume production In the wake of certification scandals in the industry.
Construction and real estate also improved.
However, while automakers and other major industries have risen to prominence, sentiment in retail and other service industries has deteriorated, falling from 34 companies to 33 companies, although they are still in positive territory.
The retail trade index fell sharply from 28 to 13.
of bank of japan began a shift earlier this year from a negative interest rate policy aimed at keeping credit ultra-cheap to support the economy as the population shrinks and demand erodes. Ultra-easy monetary policy remained in place for years to counter a long period of deflation, when demand was so low that prices fell.
However, rising global prices following the coronavirus pandemic and the depreciation of the Japanese yen against other currencies have pushed prices past the Bank of Japan’s inflation target of approximately 2%, prompting the Bank to shift to a more conventional stance. It became possible to start.
Japan posted a trade deficit for the fourth straight month in October as import costs remained high due to the weak yen and rising energy prices.
prime minister Shigeru Ishiba To help boost consumer spending, it proposes raising Japan’s basic tax-free deduction, increasing take-home pay and paying subsidies to low-income households.
But his minority government is likely to struggle to win support from opposition parties on the budget and other bills, raising the risk of a political deadlock that could hamper economic efforts.
