Japanese Manufacturers’ Sentiment Recovers in January
TOKYO (Reuters) – The sentiment of Japanese manufacturers recovered in January after a decline in the previous month, according to the latest Reuters Tankan poll. The poll of 505 non-financial major Japanese firms found that manufacturers’ mood rose to plus 2 in January, up from the previous month’s minus 1, which was the first negative reading in 10 months.
The improvement in sentiment was most notable in industries such as steel, oil refinery, and chemicals, where the recovery in global demand lifted mood. However, machinery sectors such as autos and electronics saw their sentiment deteriorate in January.
Managers in various sectors expressed concerns about the impact of US President-elect Donald Trump’s policies, particularly on international trade. “It’s difficult to take any action now given the uncertainty about what policies will be implemented and whether tariffs will really be increased,” wrote a manager of a machinery maker.
The service sector saw a slight increase in confidence, moving to plus 31 in January from 30 in the previous month, with one retail company manager noting that “with high domestic consumer confidence, the number of customer visits, including inbound tourists, is growing steadily.” A construction firm manager reported that despite a labor shortage, they have been able to pass on costs to service prices to secure profits.
The Bank of Japan’s (BOJ) view that wage-driven economic growth will lead to stable inflation around its 2% target and support a further rate hike is boosted by the improving business confidence. The BOJ’s next policy meeting is scheduled for January 23-24.