Japan’s Manufacturers’ Confidence Rises But Outlook Remains Obscure

Japanese manufacturers’ confidence grew in October but the forecast for the next quarter is for it to remain flat, based on the survey by Reuters. This tells that global trade concerns may affect the economic outlook.

The monthly survey from Tankan shows that non-manufacturers confidence drops to its lowest rate in almost two years due to natural disasters that affected the companies and consumers alike. Nonetheless, the government is monitoring the progress.

The non-manufacturers’ index dropped to 24 this month from 33 due to transportation or utility and retail or wholesale sectors. This data is anticipated to return to 29 in January.

On another source, the Reuters Tankan outlook anticipated recovery of the trend, implying that market outcome from natural disasters is just for a short period of time, however, there are also increasing external risks at play.  

The sentiment index for manufacturers stands at 28 and increased by two points compared last month, which was driven by metal products/machinery and textiles/paper based on the survey between September 27 and October 10. The data shows a flat trend in January.

Reports on large manufacturers from the latest Tankan reports declined in the third quarter at the lowest level in almost a year amid the rising costs of materials besides natural disasters that affect production. The forecast of the central bank says that that global trade war will have an effect on the future of businesses.

Also, the economic growth forecast of the International Monetary fund shows a lower forecast this month that warns higher risks entailed because of global trade as wells as proposed sales tax increase for next year.