Japan sees lower business sentiment

According to the latest report, the Tankan index, which reflects business sentiment in Japan, dropped considerably. Large companies in the processing industry suffered the largest losses. Between July and September 2022, the Tankan index plummeted to the lowest level within the last six quarters. The indicator dropped to 8 points from the previous 9 points recorded in Q2 2022. The Central Bank of Japan is concerned about such low values. According to Trading Economics, economists expected the index to rise to 11 points. Thus, the index declined for three consecutive quarters. The increase in companies’ expenses, the falling yen, as well as recently introduced COVID-19 restrictions in China were among the main reasons. In a recent survey, the BOJ reported that major companies intend to increase capital investment by 21.5% in the current fiscal year, which ends in March 2023. At the same time, the business conditions subindex of industrial corporations’ expectations in Japan fell to 9 points from 10 points, while companies in the non-manufacturing sector dropped to 11 points from 13 points. The index that evaluates the sentiment of small companies in the processing industry remained unchanged from July to September 2022 at minus 4 points. Meanwhile, the indicator which reflects the current level of large non-manufacturing companies’ confidence increased to 14 points in the third quarter of this year. Notably, over the past three months, this indicator stood at 13 points.