TOKYO – The confidence of Japan’s large manufacturers in the country’s economic performance worsened in September compared to the previous quarter and recorded its third consecutive quarterly decline, reaching its lowest point in six years, the Bank of Japan reported Tuesday.
According to the Japanese central bank’s quarterly economic outlook report known as Tankan, the confidence index of large manufacturing companies in the country’s key sectors was plus 5 points, 2 less than in June, when it was 5 lower than in March.
Although this result beat the forecasts of most analysts, it is this indicator’s worst level since June 2013, when it stood at just 4 points.
The confidence index of large companies in the non-manufacturing sector recorded a drop of 2 points with respect to the first quarter of 2019 to stand at 21 units.
The Tankan business confidence index reflects the difference between the number of large Japanese companies that consider the conditions for doing business are positive and those who consider the prospects are negative.
Analysts see the Tankan survey as a key indicator of the state of the Japanese economy and as a pointer of future growth in Asia’s second-largest economy.
The drop in the confidence index may be attributed to the impact of global economic uncertainty – especially the long-drawn trade dispute between China and the United States – on the Japanese export sector.
In addition, Japan hiked the value-added tax from 8 percent to 10 percent on Tuesday amid fears that the move may have an adverse effect on domestic demand.