Japanese manufacturers’ mood in August rises to 7-month high

© Reuters. FILE PHOTO: A factory area is seen in front of Mount Fuji in Yokohama, Japan, January 16, 2017. The image was taken January 16, 2017. REUTERS / Kim Kyung-Hoon

By Kantaro Komiya

TOKYO (Reuters) – Japanese manufacturers’ business confidence improved in August after last month’s stagnation, while the mood of companies in the services sector rose for a second month to a high. in nearly three years, a Reuters Tankan poll showed.

Although commodity inflation continues to weigh on profits, demand is returning, according to companies surveyed in the world’s third-largest economy, which publish April and May gross domestic product. 6 recovered on Monday.

However, prospects for further recovery are being subdued due to inflationary pressures, a resurgence of COVID-19 in the country, and a lackluster supply outlook for key components such as semiconductors.

Manufacturers are expected to improve slightly over the next three months, and the services firms outlook index was unchanged in the August 2-12 poll, which tracks the Bank’s quarterly survey. Central Japan (BOJ).

The director of a food production company in a poll of 495 large and medium-sized companies said: “The economy is reopening and consumption seems to be picking up, although we are not without risks. Increasing prices can send chills down the spine of consumers.” , of which 256 responses.

The Reuters Tankan Manufacturers Sentiment Index rose to 13 in August from 9 the previous month, marking a seven-month high. The service sector index rose to 19 from the 14th of the previous month and hit its highest level since October 2019.

(For a detailed table of results, click)

The sub-index for manufacturers that trade in raw materials such as chemicals and refineries/ceramics gained double digits on the back of strong demand for semiconductor-related goods. The mood of the textile/paper industry fell 20 points as costs persisted.

The transport equipment manufacturers sub-index was flat at minus 38, with some citing carmakers’ production cuts and chip shortages as reasons for the decline. recovery stalled.

Among service sector businesses, transport/utility companies and wholesalers led the improvement, with many respondents saying a weak yen is boosting overseas profits.

The index for “other services”, a category that includes restaurants and hotels, fell 10 points, as live services were affected by Japan’s rapid COVID-19 resurgence at the end of the year. last month, although the government did not reinstate any restrictions.

Regarding the three-month futures outlook, manufacturers expect their mood to rise 2 points to 15 in November, while services firms expect sentiment to remain steady at 19, the exploration shows.

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