Japan’s Q4 tankan factory mood set to weaken on inflation, global slowdown


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TOKYO — Japanese manufacturers’ sentiment likely weakened in the last quarter of 2022 on sustained cost pressures and a bleaker global economic outlook, a Reuters poll of analysts showed on Friday.

Shrinking business confidence bodes ill for the world’s third-largest economy, as firms brace for labor talks in early 2023. Wage hikes are seen as essential to revive the economy’s feeble growth.

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The Bank of Japan (BOJ)’s closely-watched “tankan” corporate survey is likely to show the headline index for big manufacturers’ mood down for a fourth consecutive quarter to 6 in December from 8 in September, according to 17 economists surveyed by Reuters.

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“Corporate profits are squeezed by a global economic slowdown and raw material cost hikes, despite tailwinds from a weak yen-helped improvement in exports and eased supply bottlenecks for the auto sector,” said Takumi Tsunoda, senior economist at Shinkin Central Bank Research Institute.

Meanwhile, the big non-manufacturers’ confidence index likely extended growth to 17, the highest since late 2019, from 14, as face-to-face service operators cheered Japan’s economic reopening from the pandemic, according to the poll.

No change is expected in large manufacturers’ mood three months ahead, but service-sector firms see a slight deterioration in their prospects, the poll showed.

The tankan will also show big firms plan to increase capital expenditure by 20.9% in the fiscal year ending in March, slightly down from 21.5% in the previous survey, the poll showed, with some analysts citing rising uncertainties over future business conditions.

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The BOJ will release the survey results on Dec. 14 at 8:50 a.m. local time (Dec. 13 at 2350 GMT).

Separate trade data due on Dec. 15 at 8:50 a.m. (Dec. 14 2350 GMT) will likely show imports up 27.0% and exports up 19.8% year-on-year in November, slowing from the previous month’s 53.5% and 25.3% increases, respectively.

The trade balance is expected to stay in deficit for the 16th straight month.

The poll also showed annual wholesale inflation rate likely stayed elevated at 8.9% in November, while core machinery orders, a leading indicator of business spending, likely grew 2.6% month-on-month in October, the first rise in three months. ($1 = 136.2900 yen) (Reporting by Kantaro Komiya; Editing by Sam Holmes)


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