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Japan Confidence Dips: Slump in Demand Hits Key Industries
14 Jan
Summary
- Manufacturers' confidence index fell to a six-month low in January.
- Oil, steel, and ceramics sectors showed significant drops in sentiment.
- Service sector sentiment declined, impacted by fewer Chinese tourists.
Japanese manufacturers' confidence has declined to its lowest point in six months, with the Reuters Tankan poll showing the index at plus 7 in January, down from plus 10 in December. This dip reflects growing concerns over sluggish demand in major economies. The materials industries, specifically oil, steel, and ceramics, experienced the most significant drops in sentiment, signaling a challenging start to the year.
Smaller declines were observed in the auto and electronic machinery sectors, though some managers cited shrinking exports due to tariffs. The non-manufacturing sector also saw a marginal decrease in confidence, with wholesalers and retailers reporting lower sentiment. The service industry noted the impact of reduced Chinese tourist numbers, leading to a substantial drop in sales for some businesses like department stores.
Despite the current downturn, manufacturers anticipate a recovery in sentiment by April, forecasting the index to rise to plus 10. However, non-manufacturers are more cautious, predicting a further deterioration to plus 26. This outlook suggests ongoing economic uncertainties for businesses in Japan.
