Major Japanese firms' sentiment positive for 4 quarters in row

The business sentiment index for large companies of all industries stood at plus 2.0.

While nonmanufacturers' index logged a positive reading for the 10th straight quarter as they saw progress in passing on costs to customers, manufacturers' index turned negative for the first time in three quarters partly due to materials price increases.

The index represents the proportion of firms recognizing that their business circumstances improved from the previous quarter minus the percentage of those feeling that the conditions deteriorated.

The latest survey was conducted as of Feb. 15. Large nonmanufacturers' index stood at plus 4.1, with sentiment improving in the services industry thanks to increasing numbers of customers and progress in efforts to pass on higher costs to customers.

The information and telecommunications sector also saw an improvement in sentiment, helped by increased demand for software development. Large manufacturers' index came to minus 2.4.

The index dropped to minus 16.5 in the food sector, reflecting high materials prices and an increase of budget-minded consumers.

Sentiment also deteriorated among chemical makers. Business confidence among manufacturers is expected to remain negative in April-June amid uncertainties over the policies of the administration of US President Donald Trump.

The sentiment index for midsize companies came to plus 0.7, while that for small businesses stood at minus 12.7. The index on employment, or the percentage of firms with labour shortages minus that of those with an excess of workers, marked a record high reading for large companies of all industries.

Ordinary profits at all surveyed companies are forecast to rise 6.5 pct from the previous year in fiscal 2024, which ends this month, but fall 0.2 pct in fiscal 2025.

Their capital spending is projected to increase 7.4 pct in fiscal 2024 and rise 5.9 pct in fiscal 2025.

[Copyright The Jiji Press, Ltd.]

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