The confidence of large Japanese manufacturers took a hit in the first quarter and is predicted to continue decreasing in the coming months, according to the findings of Bank of Japan's quarterly Tankan survey released on Monday.
The key sentiment index for large manufacturers decreased from 13 in the previous term to 11 in the quarter ending in March, marking the first reduction in a year. Despite the drop, however, the score ended up slightly surpassing economists' prediction of 10.
The future outlook index for large manufacturers was marked at 10, falling short of the forecasted 11.
In contrast to the manufacturers, the business confidence among major non-manufacturers showed a rise, increasing to 34 this quarter from 32 in the last one. These figures are the highest since 1991. Yet, index projections for the quarter ending in June anticipate a drop to 27.
Moreover, the survey displayed intentions of significant businesses to up their capital expenditure by 4.0 percent in fiscal year 2024. This rise, however, stands dwarfed against the eye-catching 11.5 percent rise expected in the preceding fiscal year. The rate of employment plunged slightly from -35 to -36 in the first quarter, indicating strong labor shortage.
According to Capital Economics economist Gabriel Ng, the projections from the Tankan survey make a quick recovery from the anticipated drop in the first quarter GDP seem highly unlikely.
In other news from Monday, data from the Purchasing Managers' survey by S&P Global informed that although Japan's manufacturing activity shrunk for the tenth consecutive month in March, the rate of decline slowed, on account of smaller contractions in both production and new orders.
March’s figures for the au Jibun Bank manufacturing Purchasing Managers' Index increased to 48.2 from 47.2 in February, registering the highest score in four months.
