Japanese Manufacturers Turn Less Pessimistic, Services’ Firms Confidence Weakens

Manufacturing firms in Japan have turned less pessimistic about the pandemic and its impact on their business; however, Japanese services businesses have become more worried about the latest wave of infections. According to the recent Reuters Tankan survey, business sentiment among manufacturers improved from -9 in December to -1 in January – the highest reading in over a year.

Meanwhile, the business sentiment index among the services sector in Japan fell from -4 in December to -11 in January as the country announced a state of emergency to tackle the latest spike in coronavirus cases. According to the survey, the sentiment in the services sector is likely to improve only slightly to touch -9 going forward as the second round of restrictions in Tokyo and other populated regions are expected to keep consumers away.

The business sentiment across the manufacturing sector is also forecast to decline slightly, with business confidence expected to decline to -2 in April. Even though demand has improved over the past few months, the second wave of the pandemic has driven considerable uncertainty in Japanese markets, causing business confidence to falter as well.

While the Japanese economy posted a rebound, growing by 22.9% YoY between October and December, the government has already announced more fiscal stimulus worth $3 trillion to support the economy further. However, the recent spike in new cases could drive a contraction in economic activity all over again in the world’s third largest economy.

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Arslan Butt

Index & Commodity Analyst

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

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