Home Web information Japan’s business mood subdued due to chip shortages and raw material costs – Reuters Tankan

Japan’s business mood subdued due to chip shortages and raw material costs – Reuters Tankan

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Pedestrians walk through a business district in Tokyo, Japan, December 7, 2020. REUTERS/Kim Kyung-Hoon

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  • July Manufacturing Sentiment Index +9, stable from previous month
  • Services sector index at +14 against +13 in June

TOKYO, July 13 (Reuters) – Japanese manufacturer confidence in July was subdued, a Reuters poll showed, reflecting pressure from a problematic chip shortage, China’s strong response to the pandemic and a weak yen that is making increasingly expensive imported materials.

The Reuters Tankan – which closely tracks the Bank of Japan’s quarterly tankan survey – showed that manufacturing and service sector sentiment improved only modestly over the next three months.

The subdued sentiment adds to a recent mixed batch of data that underscores the economy’s difficulty in mounting a robust recovery and shows that businesses have struggled to benefit from improving demand, particularly at home.

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The survey of 495 large and medium-sized businesses between June 29 and July 8, of which 248 responded, showed business leaders worried about the fallout from China’s COVID-19 restrictions and a lingering shortage of chips and parts.

“Our sales are down due to the impact of shutdowns in China and shortages of semiconductors,” said an executive at a transportation equipment maker.

Japanese factories cut production at the fastest rate in two years in May, largely due to the adverse effects of Chinese coronavirus restrictions, such as in Shanghai. Read more

Some analysts believe it may be some time before Japanese manufacturing, and in particular the key automotive sector, benefits from an upturn in economic activity in Shanghai as the risk of further COVID-19 restrictions remains. .

The Reuters Tankan confidence index for manufacturers remained stable at 9 in July.

The index is expected to hit 13 in October, although much of that is likely to depend on improving conditions in the automotive and transportation equipment subsector. His sentiment remained deeply negative in July.

The services sector index rose from 13 to 14 in June, driven by wholesalers and information/communications. He was due to turn 18 in October.

Retail sentiment remained flat, while Real Estate/Construction sentiment was negative, weighing on overall service sector sentiment.

The BOJ is due to hold its next policymaking meeting on July 20-21.

The central bank’s tankan survey this month showed that the mood of major Japanese manufacturers deteriorated for a second straight quarter in the three months to June, also in part due to rising costs of inputs. Read more

Rising energy and commodity prices were frequently mentioned by business leaders in the Reuters Tankan survey.

“Our margins have declined due to raw material costs and a weak yen,” wrote a steelmaker manager.

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Reporting by Daniel Leussink; Editing by Kirsten Donovan

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