Sentiment among large Japanese nonmanufacturers recovers to pre-pandemic levels
Sentiment among large Japanese nonmanufacturers recovers to pre-pandemic levels
Japan

TOKYO: Business confidence among major Japanese nonmanufacturers recovered to pre-pandemic levels in December, enhanced by the lifting of the COVID-19 state of emergency. However, the improvement of sentiment among manufacturers was dragged by parts shortages and surging raw materials costs, local media reported Monday.

According to the quarterly “Tankan” survey, the key confidence index for nonmanufacturers including the services sector, increased to 9 from 2 in the previous survey, logging the sixth consecutive quarter of improvement, the highest since December 2019.

The Tankan index represents the percentage of firms reporting favourable conditions minus the percentage reporting unfavourable ones.

Since the COVID-19 emergency was fully lifted across Japan on Oct. 1, the recovery of economic activities has provided some relief to service providers, which had seen a sharp drop in customers and sales, such as dining establishments, bars, and hotels.

The business confidence among hotel and restaurant operators jumped 24 points from September to minus 50 while that among providers of face-to-face services surged 36 points to minus 9. However, the sentiment among manufacturers stood most flat in reporting period after recovering faster than that of service providers from the pandemic fallout, dragged by parts shortages triggered by factory shutdowns in some Southeast Asian nations and soaring raw materials costs.

Automakers were more pessimistic with the sentiment down 1 point to minus 8 compared to the previous quarter. The impact of the newly discovered Omicron variant, which could put a dampener on the economy, was not reflected fully in the latest data, an official of the Bank of Japan said.

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