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By Kantaro Komiya
TOKYO (Reuters) – Business confidence among Japanese brands rose in August after last month’s stagnation, while the mood of corporations in the service sector rose for a month to its point in just about 3 years, according to Reuters’ Tankan survey.
Although commodity inflation continues to weigh on earnings, demand is returning, according to surveys of the world’s third-largest economy, which on Monday recorded a rebound in gross domestic product from April to June.
However, the prospect of an additional recovery is dim due to inflationary pressures, an internal relapse of COVID-19, and murky customers for key pieces such as semiconductors.
Manufacturers expected a slight improvement over the next 3 months, and the outlook index for service corporations held steady in the August 2-12 survey, which largely follows the Bank of Japan’s (BOJ) quarterly tankan survey.
“The economic reopening is underway and intake is recovering, we are not exempt from the threat that more and more value increases will cool consumers,” an agribusiness manager said in a survey of 495 giant and medium-sized companies, of which 256 responded.
Reuters’ Tankan manufacturers confidence index reached thirteen in August from nine last month, marking a seven-month high. The sector’s index rose to 1 nine from 14 last month and hit its highest point since October 2019.
(For a detail of the results, click)
Sub-indices of commodity brands, such as chemical and petroleum/ceramic refineries, posted double-digit increases, driven by demand for semiconductor-related products.
The sub-index of transportation appliance brands remained unchanged at minus 38, with some citing automakers’ production cuts and chip shortages as reasons for the stagnation of the recovery.
Among the services sector, transport/utilities and wholesalers led the improvement, with several respondents saying a weak yen boosted overseas earnings.
Reading of “otherArray,” a category that includes restaurants and hotels, fell 10 numbers as face-to-face was affected by the immediate resurgence of COVID-19 in Japan last month, even though the government did not reinstate any restrictions.
In the three-month outlook, brands expected their mood to be 2 to 15 in November, while service companies expected sentiment to remain strong at 19, according to the survey.
(Reporting via Kantaro Komiya)