Japan business confidence at lowest level since 2009

A pedestrian walks by a closing sale sign on a shop in Tokyo on May 22. (AP pic)

TOKYO: Confidence among Japan’s biggest manufacturers plunged to the worst level since 2009, a key survey showed Wednesday as the coronavirus pandemic hits global demand and disrupts production.

The Bank of Japan’s June Tankan business survey — a quarterly poll of about 10,000 companies — showed a reading of minus 34 among major manufacturers, the lowest level since June 2009 when the global financial crisis hit the world’s third-largest economy.

The shock headline reading compares with market expectations of minus 31 and is worse than minus 8 in the previous survey in March, the first negative reading in seven years.

The short-term business sentiment survey reports the difference between the percentage of firms that are upbeat and those that see conditions as unfavourable.

A negative reading means more companies are pessimistic than optimistic. It is considered to be the broadest indicator of how Japan Inc is faring.

Although the coronavirus has hit Japan less hard than many advanced nations, it has still taken a bitter economic toll, catapulting the country into its first recession since 2015.

Prime Minister Shinzo Abe has passed two record stimulus packages worth nearly US$2 trillion to cushion the impact, including handing out US$925 to every man, woman, and child in Japan.

Unemployment is rising, albeit to a rate that would make most countries jealous. Data released on Tuesday showed the jobless level rose from 2.6% to 2.9%.

The low unemployment figure reflects a shrinking workforce given Japan’s rapidly ageing population where 28% are 65 or over.

Analysts said that millions of people — especially women — simply left the workforce during the pandemic to care for families.

Japan was struggling with the effects of natural disasters and a hike in consumption tax even before the pandemic crippled the global economy.

The pandemic has spared Japan, relatively speaking, with fewer than 1,000 deaths and around 19,000 cases recorded.

There have been no mandatory lockdowns, with the government instead asking people to stay at home — requests that were largely heeded.

But that, coupled with a shuttering of the country’s borders, battered tourism, and consumer spending.