The confidence of major manufacturers has worsened in March, according to the tankan of the Bank of Japan

The business climate at major Japanese automakers deteriorated in March from three months earlier, registering the largest point loss since December 2012, due to concerns over the slowdown in the economy. Chinese and overseas economies, said the Bank of Japan. tankan survey showed Monday.

The key index measuring business confidence such as automotive and electronics manufacturers is set at 12, down from 19 at the December survey . The result was slightly lower than the market average estimated at 13 in a Kyodo News survey.

The seven-point drop is the largest since December 2012, when Prime Minister Shinzo Abe's current government was launched, after the index remained unchanged at 19 in December. Major manufacturers expect a further decline to 8 for the coming months, the survey reveals.

Indices represent the percentage of companies reporting favorable conditions minus the percentage of adverse indicators.

A BOJ official said weak demand in Asian markets, including China, had discouraged Japanese manufacturers such as electronics manufacturers.

As we expect more and more of an agreement in the trade negotiations started last year between the United States and China after the imposition of hundreds of billions of dollars of customs duties on their exports, this crisis has hurt the global economy, including Japanese exports to China.

The lower outlook for major manufacturers has surprised badysts, suggesting that Japanese companies do not see the rapid end of the gloom surrounding the first quarter.

The deterioration in confidence should fuel concerns about the impact that an expected October sales tax hike could have on a weakened economy. A previous rise had triggered an economic contraction.

Capital spending projects, a pillar of recent economic growth, have been weaker than a year ago, but slightly stronger than expected, suggesting that alarm bells are not yet boardrooms of companies.

By industry, machine manufacturers were less optimistic mainly because of the slowdown in the Chinese economy, while nonferrous metals producers and pulp and paper companies were hit by rising raw material costs.

The major manufacturers were expecting an exchange rate of ¥ 108.87 against the US dollar for the 2019 fiscal year beginning April 1, a level higher than the ¥ 109.41 recorded for the fiscal year. previous ending in March. In general, a stronger yen harms manufacturers who depend on exports but reduces import costs.

The sentiment among large non-manufacturers fell 3 points to 21 and was forecast at 20 for the coming months, with many respondents blaming a persistent labor shortage.

Large companies, ranked among those with a share capital of more than JPY1 billion, announced plans to increase capital spending by 1.2 percent in FY 2019, which would have slowed 13.9% increase over last year.

The BOJ surveyed 9,830 companies from February 25 to March 29, of which 99.4% responded.