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Business sentiment among large Japanese companies in the January-March period turned negative for the first time in three quarters under the government’s latest state of emergency over the coronavirus pandemic, a government survey showed Friday.

The confidence index covering firms capitalized at ¥1 billion ($9.2 million) or more logged minus 4.5, down from plus 11.6 in the October-December period, according to the joint survey by the Finance Ministry and Cabinet Office.

The figures are calculated by subtracting the percentage of firms reporting worsening conditions from those observing improvements.

The outcome reflected the impact of the country’s second state of emergency declared in early January for the Tokyo metropolitan area amid a resurgence of virus infections, with requests made for restaurants and bars to close early and people to refrain from unnecessary outings.

After being expanded to a total of 11 prefectures within a week, the emergency was scaled down in stages and now only covers the Tokyo metropolitan region with declines in virus cases. It is set to expire on March 21.

The index for manufacturers stood at plus 1.6, down from plus 21.6 in the previous quarter but remaining positive for the third three-month period in a row. The index for nonmanufacturers came to minus 7.4, dropping from plus 6.7 and turning negative for the first time in three quarters.

“The service industry saw decreases in the number of customers as a result of stay-at-home requests” amid the virus emergency, a ministry official told reporters.

The situation of smaller businesses was more serious as the index for firms capitalized at ¥10 million or more but less than ¥100 million fell to minus 31.4 from minus 15.5 in the October-December period to see the first decrease in three quarters, remaining negative for the 28th consecutive quarter.

For midsize companies capitalized at ¥100 million or more but less than ¥1 billion, the index fell to minus 15.2 from plus 5.5 in the October-December.

Looking forward, the index forecasting business conditions for large companies in the three months through June was plus 2.5, and that for the following quarter stood at plus 7.1.

The survey covered 13,969 companies capitalized at ¥10 million or more, with 10,912, or 78.1%, responding by Feb. 15.

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