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BOJ tankan expected to show big manufactures confident on outlook: Reuters poll

By Thomson Reuters Jun 20, 2024 | 11:04 PM

TOKYO (Reuters) – Confidence among big Japanese manufacturers likely improved slightly in the three months to June, while non-manufacturers’ mood slipped a bit, the Bank of Japan’s (BOJ) closely-watched tankan survey is expected to show, according to a Reuters poll of 18 economists.

The tankan manufacturers’ sentiment index likely stood at plus 12 in the June quarter versus plus 11 in the prior three months, with their confidence improving further to plus 13 over the coming three months.

The service sector mood probably fell slightly to plus 33 in June, versus plus 34 in the prior quarter, and it is expected to decline further to 31 in September, the BOJ tankan is expected to show on July 1.

Big firms are expected to raise capital expenditure by 13.9% this fiscal year, compared with 4% seen in the previous tankan survey.

The tankan survey follows the central bank’s decision in June to reduce its massive government bond purchases in a shift away from years of monetary stimulus. Companies and investors are now watching closely to see if the BOJ will raise interest rates again in July at the same time as it starts tapering bond buying, or make the next hike later in the year.

Despite the cost-push inflation being driven by a weak yen, analysts say trend inflation is struggling to pick up. The so-called core-core inflation excluding fresh food and energy is seen to slow due to weak demand, clouding the outlook for further interest rate hikes in coming months.

The internal affairs ministry will release data on June 28 which is expected to show Tokyo-area core consumer inflation probably accelerated slightly in June, the Reuters poll of economists shows.

The Tokyo-area core Consumer Prices Index (CPI) data, which excludes volatile fresh food, is expected to show the consumer inflation rose 2.0% year-on-year in June, accelerating from the prior month’s 1.9% and keeping in line with the BOJ’s inflation target.

Separate data by the industry ministry is likely to show Japanese factory output rebounded 2.0% in May from the previous month’s 0.9% decline, according to the Reuters poll.

(Reporting by Tetsushi Kajimoto; Editing by Kim Coghill)