Japan’s service-sector sentiment accelerates, manufacturing growth dwindles

A highly monitored central bank survey revealed that the mood in Japan’s service sector hit a two year high. However, the expansion dragged manufacturing growth. 

The Bank of Japan’s (BOJ) tankan survey revealed on Monday that the headline index evaluating big manufacturers’ sentiment was plus 18 in the fourth quarter of 2021, steady from the previous quarter and below a market prediction of plus 19. It highlighted that rising costs and vehicle output disruptions had impacted businesses, including nonferrous metals, chemicals, and machinery.

As rising fuel prices and a weak yen drive up import costs, big firms expect things to become worse in the coming months, bolstering predictions that Japan will continue to provide massive fiscal and monetary support to prop up a shaky economy.

Toru Suehiro, analyst at Daiwa Securities, stated that “Non-manufacturers’ sentiment got a boost from the end to pandemic curbs, while supply constraints hit manufacturers.”