Japanese Business Confidence Falls Due to Weak Yen, Rising Prices: Reuters Poll

23 May, 2024

Japanese Business Confidence Falls Due to Weak Yen, Rising Prices: Reuters Poll

Japanese business confidence is strained as weak yen and rising prices impact profit margins, according to a Reuters poll. The survey revealed that manufacturers and service-sector firms are feeling the pressure from inflation driven by the weak yen. The poll followed data showing Japan's economy contracted 2% in the first quarter, with weakened private consumption, capital expenditures, and exports.

A chemicals firm manager noted the economic slowdown in China and increased costs for raw materials, labor, and electricity as factors squeezing profits. Similarly, a machinery maker manager observed that domestic orders lacked momentum due to increased costs, making clients hesitant to boost capital expenditure. The Reuters Tankan survey, which tracks the Bank of Japan, found manufacturers' confidence steady at plus 9, with expected slight improvement in the coming months. Non-manufacturers' confidence inched up to plus 26 but is projected to decline by August. The poll included responses from 229 out of 493 large non-financial companies.

The indexes are calculated by subtracting the percentage of pessimistic respondents from optimistic ones. This data provides insight into the challenges faced by Japanese businesses amid economic pressures from a weak yen and global market fluctuations.