Jiji Press TOKYO (Jiji Press) — A Bank of Japan tankan survey report due out July 1 is likely to show a second straight quarterly fall in manufacturing sentiment, think tanks say.
The headline diffusion index for business sentiment among large manufacturers is predicted on average at plus 9 for the upcoming June report, down 3 points from the March report, according to a recent Jiji Press poll of 15 private research institutes. The DI lost 7 points in the previous tankan.
The weak estimate reflected flagging production and exports against the backdrop of the prolonged U.S.-China trade friction.
Fourteen institutes project a fall in the DI in the June tankan, while the other institute expects no change.
Sharp deteriorations are forecast for the machinery-related, steel and nonferrous metals industries, in light of overseas economic slowdowns and sluggish demand for semiconductor chips.
The index on the business outlook among large manufacturers is forecast at plus 7, indicating continued deterioration.
Many big manufacturers are seen growing cautious due to uncertainty over Japan-U.S. trade talks, in which the United States is demanding Japan improve market access for U.S. agricultural products.
Meanwhile, the current-sentiment DI for large nonmanufacturers is estimated at plus 20, down only one point.
The nonmanufacturing sector is believed to have enjoyed firm consumption, partly thank to the 10-day public holiday period from late April to early May, although manpower shortages continued overshadowing the sector.
Capital expenditures planned by large companies for fiscal 2019 are predicted to grow 8.9 percent from the previous year, stronger than a 1.2 percent increase in the March tankan.
Capital spending plans, however, “may be downgraded in the future,” if U.S.-China trade tensions escalate further or the yen strengthens against other major currencies, said Shinichiro Kobayashi, economist at Mitsubishi UFJ Research and Consulting Co.Speech