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TOKYO – Confidence between major Japanese industrial firms weakened for the second consecutive quarter over the three months to June due to growing concern over the potential impact of trade frictions between China and the United States. The BoJ central bank survey released Monday in Tokyo
The main index measuring the sentiment of major manufacturers was + 21 over the period from April to June, in The reading was also lower to the + 22 forecast made by economists surveyed by the newspaper "Nikkei", reaching the lowest level in a single year, according to a quarterly survey.
year. The index represents the percentage of companies that say the economic conditions are favorable, minus the percentage of those who say the conditions are unfavorable.
US President Donald Trump has threatened to impose tariffs on cars imported into the United States. This, if it becomes a reality, can have a huge impact on the Japanese economy. In 2017, nearly 40 percent of Japan's auto exports went to the United States, according to the Japan Automobile Manufacturers Association.
The survey also showed that major manufacturers are expecting a decline in profits of 8.6% during the 2018 fiscal year, ending in March 2019. This is based on the badumption that the dollar will be traded at an average of 107.26 yen in this trading year.
Still, there are some positive signs. Larger companies plan to increase capital spending by 13.6% this fiscal year, a sharp increase over a three-month projection of 2.3%.
Non-manufacturing firms more optimistic than exporters. The Tankan index for large non-manufacturing companies reached +24 in the June survey, compared with +23 in the previous quarter. The reading was slightly higher than the economists' forecast of + 23.
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