Japan manufacturers’ mood falls to 7-month low in November – Businesshala Tankan

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TOKYO (Businesshala) – Business confidence of Japanese manufacturers fell to a seven-month low in November due to ongoing supply shortages, while sentiment in the services sector hit a three-month high on easing coronavirus restrictions, Businesshala Tankan poll showed up.

A worker rests in a warehouse in Keihin Industrial Zone in Kawasaki, Japan September 12, 2018. Businesshala/Kim Kyung-hoon

The mood among manufacturers turned rough for the third month in November, but they became more optimistic about the outlook, according to the monthly survey, which closely tracks the Bank of Japan’s (BOJ) token quarterly survey due on December 13. keeps.

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The survey found that sentiment index among services sector firms rose slightly in November, while their three-month outlook also improved, as the government eased coronavirus restrictions due to a fall in COVID-19 cases since late September.

Between October 26 and November 5, 502 large and medium-sized companies were surveyed, of which 254 responded, indicating that managers are concerned about supply issues and commodity inflation.

“Our revenue and profits were lower than expected due to reduction in production by car makers due to chip shortage and rising steel prices,” said a manager of a machinery company.

The Businesshala token sentiment index for manufacturers fell from 16 in October to 13 in November – its lowest level since April – while the services index rose to a three-month high of minus 1.

(Click for detailed table of results)

While Japan’s economic recovery from the COVID-induced slowdown has been driven by exports, consumption by coronavirus restrictions, semiconductor shortages and other supply constraints have hurt manufacturers in recent months. Meanwhile, the services sector is being underpinned by the economy reopening.

But service companies in the poll said they did not see a clear boon for their businesses, with the slowdown in demand during the long period of COVID-19 yet to make a comeback.

The government lifted its COVID-19 emergency restrictions in late September, and has since eased some other restrictions that remained in Tokyo and other large cities in October.

“It appears that the economy has reopened after the emergency is lifted,” said a wholesale company manager. “But the recovery in demand is still sluggish.”

The BOJ’s latest tankn survey, released in October, showed an unexpected improvement in the business mood of large manufacturers on the back of solid global demand.

However, some BOJ board members flagged ongoing supply chain constraints as a downside risk to the Japanese economy at the October policy meeting, where they decided to keep the ultra-easy monetary policy unchanged.

Looking ahead, both manufacturers and service companies were more optimistic about their prospects, with three-month readings rising from 14 to 19 among manufacturers and from 14 to 15 for service companies.

The improved outlook for manufacturers was primarily driven by optimism among automakers, which produce Japan’s No. 1 export commodity, even though the industry has been hit particularly hard by a lack of supply.

The three-month forward reading among the auto/transportation equipment sector rose from 0 in October to +29.

Large-scale producers were more upbeat about their business prospects in February 2022, except in areas hit hard by rising commodity prices.

“While our performance has not yet reached pre-pandemic levels, the impact of COVID-19 has subsided,” said a precision machinery manufacturer manager. “It’s on its way to recovery.”

Reporting by Kantaro Komiya; Editing by Ana Nicolasi da Costa

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