Japanese manufacturers’ confidence stabilizes in January, and services slump

The Reuters Tankan survey showed that the confidence of Japanese manufacturers had stabilized in January, to become less pessimistic in more than a year about the repercussions of Covid-19, but service companies increased pessimism in conjunction with the start of new closures involving the majority of the country’s population.

The degree of pessimism among manufacturers in the third largest economy in the world has reached its lowest level since July 2019, but expectations, especially for the services sector, are shaded under the shadow of a pandemic emergency that includes Tokyo and a number of other cities until February 7.

The improvement in manufacturers’ confidence came on the back of optimistic insights in the chemical, metal products and electrical machinery sectors, according to a monthly poll conducted by Reuters, which tracks the quarterly Tankan survey by the Bank of Japan.

The Reuters Tankan index of manufacturer confidence rose to negative 1 from negative 9 the previous month, while the service sector index fell to negative 11 from negative 4 in December, according to the results of the survey conducted between December 24 and January 13.

A negative reading means that the pessimists outnumber the optimists.

Japan’s economy grew 22.9% year-on-year in the third quarter, rebounding from a contraction between July and September that was the worst of the post-World War II era as the pandemic ravaged economic activity.

The government pledged to spend $ 3 trillion to boost the economy. And this month, Prime Minister Yoshihide Suga declared a second state of emergency, which now includes Tokyo, Osaka, Kyoto and other areas inhabited by 55% of the population of Japan.