Business | Economy
Sentiment at Japanese firms lowest in four years
Japanese firms' sentiment on business conditions hit a four-year low in April-June as commodity-driven inflation and a dim global growth outlook took their toll, adding to expectations that the central bank will sit tight on interest rates this year.
- Reuters
- Published: 23:32 June 23, 2008
Tokyo: Japanese firms' sentiment on business conditions hit a four-year low in April-June as commodity-driven inflation and a dim global growth outlook took their toll, adding to expectations that the central bank will sit tight on interest rates this year.
The corporate sector has been a key driver of the world's second-largest economy but is showing some signs of losing steam this year amid growing economic uncertainty and rising costs that squeeze firms' profits and curb their appetite for capital spending.
Indicators
The government's business survey index (BSI) of sentiment at large manufacturers fell to minus 15.1 in April-June from minus 12.9 the previous quarter, while that at large service-sector firms fell to minus 15.3 from minus 7.2. Both readings were the lowest since the government survey began in April-June 2004.
"The data confirms that higher oil and resource prices have hurt corporate sentiment," said Takeshi Minami, chief economist at Norinchukin Research Institute.
"Downside risks to the economy warrant careful attention, so I think the Bank of Japan's current policy stance is appropriate."
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