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[TOKYO] Confidence among Japanese manufacturers slid for the first time in three months in April but service-sector firms' mood improved, a Reuters poll showed, underscoring the uneven nature of the economy's rebound from a recession last year.
The Reuters Tankan, which closely tracks the Bank of Japan's quarterly tankan survey, followed a recent run of weak indicators that has raised concerns about a sustainable recovery in the world's third largest economy.
The monthly poll of 483 big and midsize companies, of which 266 replied between April 1 and 15, showed companies are wary of sluggish demand at home and abroad. The managers, who responded anonymously to the Reuters poll, also complained about import costs of raw materials boosted by a weak yen.
Japan Inc's cautious mood stands in contrast with more upbeat views of the central bank and the government, which see the economy on track for a moderate recovery.
While manufacturers were feeling the pinch of tepid global demand, the service-sector mood bounced to its highest since last June. Retailers shook off their pessimism for the first time since October in a sign the economy was slowly getting back on its feet after the hit from the sales tax hike last year. "Capital spending and operating ratio have lowered due to poor overseas economies including China, Europe and Brazil," an executive at a machinery maker said in the survey. "Homebuyers have been inactive since the slump caused by the sales tax hike. However there are some signs of budding recovery in demand," said an executive at a construction firm.
The BOJ's policy board meets next on April 30 to issue new economic and price forecasts that may lead to a cut in its rosy price projections. Some investors expect it to act at the coming meeting, while others see the chance of easing later this year.
Any sustained weakness in the manufacturing sector could hamper the recovery and force the central bank's hand.
The Reuters Tankan sentiment index for manufacturers fell to 12 in April from 16 in the prior month, weighed on by sectors including steel, food and textiles/paper makers. It is expected to bounce to 18 in July.
The service-sector index rose to 25 from 21 in March, led by sectors such as retailers, real estate/construction and information/communications. It is seen edging up to 26 in July.
The BOJ's tankan showed on April 1 big manufacturers were no more confident than they were three months ago, and sentiment inched up among service-sector firms.