Business confidence among Japan’s big manufacturers worsened for a second straight quarter in the three months to June, a Bank of Japan survey showed, with the outlook clouded by U. S. trade protectionism and rising input costs.
TOKYO (Reuters) – Business confidence among Japan’s big manufacturers worsened for a second straight quarter in the three months to June, a Bank of Japan survey showed, with the outlook clouded by U. S. trade protectionism and rising input costs.
It was the first time since Prime Minister Shinzo Abe swept to power in December 2012 that manufacturers’ morale has soured for two straight quarters, raising worries that his reflationary “Abenomics” policies may be sputtering.
Industrial sectors such as cars and oil dragged down the overall mood, adding to concerns that U. S. President Donald Trump may target auto imports from Japan and other trading partners for protectionist tariffs after imposing stiff duties on steel and aluminum.
The quarterly BOJ tankan’s headline index of plus 21 undershot the median estimate of plus 22 in a Reuters poll of analysts, and is expected to stay flat over the next three months.
Still, the survey also showed that big firms plan to raise their capital spending by 13.6 percent in the financial year starting April 2018, handily beating economists’ median estimate of a 9.3 percent gain.
“Manufacturers’ sentiment is leveling off while capital expenditure holds firm. I’m watching how fears of trade protectionism may affect corporate capex planning from now on,” said Masaki Kuwahara, a senior economist at Nomura Securities. SOLID CAPEX
Big manufacturers plan to increase capital expenditure by 17.9 percent this fiscal year, the fastest gain for June surveys since 2015, the tankan showed.
Large non-manufacturers plan to raise capex by 11.
