BOJ Tankan to show Q1 manufacturers’ optimism eased slightly, services improved – Reuters poll

By Thomson Reuters Mar 22, 2024 | 1:54 PM

TOKYO (Reuters) – Business optimism among Japanese manufacturers likely eased slightly in the first quarter due to some auto production disruptions, but service-sector sentiment improved further, a Reuters poll of economists showed on Friday,

The Bank of Japan’s (BOJ) closely watched “Tankan” business survey is expected to show the headline big manufacturers’ sentiment index eased to +10 in March from +12 in December, according to 14 economists surveyed by Reuters.

The BOJ ended years of unorthodox policy this week, raising rates for the first time in 17 years in a historic shift away from decades of massive monetary stimulus. But it is expected to proceed cautiously amid worries that further rises in borrowing costs could hurt the fragile economic recovery, analysts say.

“We expect large manufacturers’ mood to deteriorate due to the impact from vehicle certification issues,” said chief market economist at Yoshimasa Maruyama at SMBC Nikko Securities, referring to the suspension of shipments of some models which is disrupting auto supply chains.

On the other hand, the big non-manufacturers’ confidence index likely rose to +33 from +30 three month ago, improving for an eight straight quarter and hitting the strongest level since 1991, the poll showed.

Big manufacturers see a slight improvement in their confidence three months ahead, while service-sector firms’ strong sentiment would likely ease, the poll found.

Big firms’ capital spending plans are expected to rise by 9.2% in the next fiscal year starting in April, the poll found, following 13.5% growth projected for the current fiscal year in the December survey.

The BOJ will release the Tankan survey results on April 1 at 8:50 a.m. Japan time (March 31 at 2350 GMT).

Separate data on Japan’s industrial output will likely show a 1.4% month-on-month growth in February, which would be the first rise in two months, the Reuters’ poll showed.

Other readings are likely to show Tokyo’s core consumer inflation rose 2.4% in March, slowing from a 2.5% gain in the previous month, the poll found.

The government will release industrial output data and Tokyo’s consumer inflation on March 29.

(Reporting by Kaori Kaneko; Editing by Kim Coghill)