Japan's service-sector mood improved to a two-year high but the recovery among manufacturers stalled, a closely watched central bank survey showed, a sign rising raw material costs was weighing on the economy's recovery from the pandemic.
Big firms expect conditions to worsen ahead as high fuel prices and a weak yen push up import costs, reinforcing market expectations Japan will maintain massive fiscal and monetary support to underpin a fragile economy.
"Nonmanufacturers' sentiment got a boost from the end to pandemic curbs, while supply constraints hit manufacturers," said Toru Suehiro, an analyst at Daiwa Securities.