Japanese Manufacturers Sentiment Sinks to Five Month Low – Reuters Tankan

The monthly Reuters Tankan survey indicates Japanese manufacturer’s sentiment fell to the lowest in five months as higher input costs and a weak yen soured the mood of Japanese firms. The Reuters Tankan sentiment index for manufacturers in Japan dropped to 5 in October 2022. The index fell for the second straight month after a reading of 10 in September. The service sector index +15 vs +11 in September.

Japan Manufacturing

In the Sept. 28-Oct. 7 poll of 495 big companies, out of which 254 replied, many firms, which responded on condition of anonymity, complained about higher costs of doing business due to cost-push inflation.

  • Oct manufacturers’ sentiment index +5 vs +10 in Sept
  • Service sector index +15 vs +11 from September
  • Manufacturers’ mood seen down ahead, service-sector up
  • Reuters Tankan closely correlates with BOJ tankan

The service-sector index rose to +15 vs +11 in September reflects some firmness in private consumption, which accounts for about 60 percent of the Japanese economy. 

“There are concerns about worsening profits due to import costs boosted by a weak yen on top of rising raw materials and energy costs.” a manager of a machinery maker wrote in the survey.

One manager said, “our clients are cautious about raising capital investment due to US-China frictions and the Ukraine crisis.”

“The prices of products are not keeping pace with surging raw materials costs” as many subcontractors in the supply chain could not pass on input costs to their clients, one manager at a chemicals maker said.

The Reuters monthly Tankan poll seeks to track the Bank of Japan’s (BOJ) tankan quarterly survey poll of 479 large and mid-sized companies (not all respond). Tankan is the shorthand handle forkigyō tanki keizai kansoku chōsa, the quarterly poll of business confidence reported by the Bank of Japan on the status of the Japanese economy. 

Source: Reuters

From The TradersCommunity News Desk