Japan Business Confidence Q2 2020

Japan

Japan: Business confidence hits 11-year low in Q2

July 1, 2020

Business sentiment among large manufacturers regarding current business conditions came in at negative 34.0 in Q2, down from the negative 8.0 reading in Q1. Q2’s result marked the weakest sentiment in 11 years. As a result, the sentiment value fell further below the 0-threshold separating pessimism from optimism. The value is calculated by subtracting the number of respondents that say economic conditions are improving from the number of respondents that say they are deteriorating.

Confidence among large non-manufacturing firms fell to minus 17.0 in Q2 from positive 8.0 in Q1.

Regarding the outlook, sentiment among large manufacturers regarding business conditions in Q3 was minus 27.0, up from the current reading of minus 34.0 but still firmly in pessimistic territory. Sentiment among large non-manufacturing firms was minus 14.0, up from the current reading of minus 17.0, but, again, still pessimistic. In short, businesses expect operating conditions to remain challenging in the coming months, albeit slightly less so.

FocusEconomics panelists forecast a drop in fixed investment of 6.6% in 2020, which is up 0.5 percentage points from last month’s forecast, and an increase of 2.2% in 2021.


Author:, Economist

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Japan Business Confidence Q2  20 20 1

Note: Quarterly index of business sentiment. Values above 0 for manufacturers (actual result) indicate a positive assessment of the current business conditions. Values above 0 for manufacturers (forecast) indicate a positive assessment for the next quarter’s business prospects.
Source: Bank of Japan (BoJ).


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