Japan: Business sentiment among big manufacturers in retreat in Q1; prospects worsen
According to the Bank of Japan’s quarterly Tankan business survey, sentiment among large manufacturers declined to a two-year low in Q1 2019, reflecting concerns over the global economy and a slowdown in China. The closely watched business confidence index for large manufacturers declined from 19 in Q4 2018 to 12 in Q1 2019, undershooting the 14 reading that market analysts had expected. The Tankan business survey is calculated by subtracting the number of respondents who say economic conditions are improving from those who say they are deteriorating. A positive reading means optimists outnumber pessimists.
The forward-looking indicator for the next three months declined from 15 to 8, indicating that big manufacturers expect business conditions to deteriorate.
The survey also showed that large firms expect capital spending to increase 1.2% in the financial year to March 2020, contrasting market expectations of a 1.9% decrease.
Large manufacturers forecast that the Japanese yen will average 108.9 JPY per USD in the second half of the 2019 fiscal year, which ends in March 2020.
Lastly, confidence in non-manufacturing firms fell from 24 in Q4 2018 to 21 in Q1 2019, the lowest print in over two years.