Business / Economy

Business sentiment remains negative at Japan's big firms, survey shows

JIJI

Business sentiment among major companies in Japan remained negative in April-June, reflecting uncertainties over the U.S.-China trade dispute, a government survey showed on Thursday.

The business sentiment index for companies with capital of ¥1 billion or more stood at minus 3.7, down from minus 1.7 for January-March, according to the joint survey by the Ministry of Finance and the Cabinet Office. In October-December 2018, the index was at plus 4.3.

The index represents the percentage of companies that see their business conditions improving from the previous quarter minus that of firms feeling the opposite.

With the latest survey taken to gauge sentiment as of May 15, just after the United States raised its tariffs on imports from China worth $200 billion, companies “became more cautious (about their business performances), due to concerns over a slowdown in the Chinese economy,” a MOF official said.

The business outlook index for the major companies stood at plus 6.7 for July-September and plus 0.4 for the following quarter.

For April-June, the index for large manufacturers came to minus 10.4, worse than minus 7.3 for January-March, affected mainly by a fall in demand for auto parts and machine tools bound for China.

The index for large nonmanufacturers stood at minus 0.4, against plus 1.0 in January-March, amid a drop in profit margins in the construction sector traced to higher labor costs mirroring a manpower shortage.

The April-June sentiment index came to minus 5.3 for midsize companies, and minus 15.0 for small companies. Combined sales at all surveyed companies in fiscal 2019 are projected to grow 1.3 percent from the previous year, while their recurring profits are expected to fall 3.3 percent. Combined capital spending is seen growing 9.0 percent.