TOKYO: Japanese manufacturers’ confidence improved for a second straight month in June but the service sector’s mood slumped from May’s record high level, a Reuters poll found, suggesting some fragility in the outlook after a first-quarter contraction.
The monthly poll, which tracks the Bank of Japan’s (BOJ) closely watched tankan quarterly survey, found manufacturers’ confidence was expected to increase over the next three months while service sector sentiment was seen holding steady.
Compared with three months ago, manufacturers’ mood was slightly lower while the service sector was unchanged, indicating the BOJ’s tankan due next on July 2 will likely show business confidence as largely steady.
The mixed results highlight some reservations about the health of the economy at a time when U.S. President Donald Trump’s “America First” policy raises fears of protectionism and global trade war, clouding the outlook for export-reliant Japan.
“Appetite for capital expenditure at our clients is waning in light of increasingly protectionist policies in America and China, as well as political instability in southern Europe,” a manager of a machinery maker wrote in the survey.
In the Reuters poll of 539 large- and mid-sized companies, in which 240 firms responded on condition of anonymity, managers complained about weak consumer spending, rises in oil and raw materials costs, an uncertain global outlook and labor shortages.
The sentiment index for manufacturers stood at 26, up from 22 in May, led by industrial materials producers like oil refiners and steel makers, according to the survey conducted June 4-15.