Japanese Manufacturers’ Confidence Dropped in September as Trade Tension Continues

Japanese manufacturers’ confidence dropped this month, following a seven-month high in August. The survey shows the possibility of worsening trade war between China and the US that puts exporters hesitant.

The monthly survey of BOJ Tankan also indicates bouncing up in September from a two-year low in August driven by retail spending from summer bonuses and high heat.  

Unlike three months earlier, m manufacturers’ sentiment remained unchanged and the service-sector sentiment to slightly behind, signifying the BOJ Tankan on 1st of October to be positively holding steadily the business confidence.

The government also shows the economy to be growing at the fastest pace since 2016, overshadowing capital expenditures of the economy amid the trade tensions and natural disasters, based on the reports by Tankan on Monday.

Although, the business morale is anticipated to recover in the next three months but not the service-sector which is slightly declining.

Reuters survey also shows exporters of cars and metal products or machinery raised concerns on the effect of the trade war tensions as they react on putting tariffs, influencing shipments and capital expenditure.

Manufacturers’ index remained the same with the figures three months ago but this is expected to recover in December.

Meanwhile, the service sector index grew to 33 from 25 last month, driven by retailers. In comparison, it dropped by 2 points from June data of 35 points. This is once again presumed to go down in December.

Figures slid down for the second consecutive quarter primarily due to higher costs as an after-effect of US trade protectionism that affect negatively Japan, being an export-reliant nation.

On the other hand, the revised government data showed a boost in capital spending, resulting in a growth of 3.0 percent annually in the second quarter. This has exceeded economists’ forecast of 2.6 percent gain and the fastest growth so far since the first three months of 2016.