The sentiment of manufacturers in Japan worsened

The Japanese Tankan index, a measure of the level of trust among the major companies of the processing industry decreased for the second consecutive quarter after reaching a 13-year high at the end of last year. It is reported Bloomberg.

In April-June the index dropped to 21 points with 24 points in the previous quarter, according to data from the Bank of Japan.

Surveyed by Bloomberg analysts on average had forecast a decline to 22 points.

The decline of the indicator is observed for the second consecutive quarter for the first time since Prime Minister Shinzo Abe came to power in December 2012

It is expected that the index will remain unchanged for the next three months.

While trade tensions clouded the prospects for companies worldwide, large manufacturers in Japan pointed to the shortage of workers and rising cost of materials as key sources of concern.

The confidence indicator large non-manufacturing companies in the country in April-June increased to 24 points with 23 points in the previous quarter. The forecast assumes maintaining the indicator at the level of the first quarter.

Large companies in all industries said that they plan to increase investments in fixed capital by 13.6% in the fiscal year ending in March 2019 (consensus +9.3 per cent).

Large manufacturers expect an average exchange rate of the yen will be 107,26 per dollar in the fiscal year ending in March 2019.

The indicator of moods of small companies of processing industry decreased slightly and was at around 14 points. The confidence indicator for small non-manufacturing companies fell from 10 to 8 points.

The survey “Tankan” was held from 29 may to 29 June 9 among the 950 companies.

Right now, highly rigid labor market of Japan worried about big business more than the risk of a global “trade war”. This complicates the hiring of workers and encourages firms to increase wages.

As reported “Vesti.”Economy, unemployment in Japan from a seasonally adjusted annual rate in may dropped to 2.2% from 2.5% in April and reached its lowest level since 1992

The ratio of the number of vacancies and job seekers in may was 1.6, reaching the highest since 1974 This means that for every 100 job seekers in may accounted for 160 vacancies.

Employment data indicate a strong upward pressure on wages, which are still poorly reacted to the highly rigid labour market. Companies hire more employees on permanent contracts, full-time work, which usually means higher salaries and bonuses.

The prospect of higher wages that are so worried about the business – is precisely what the government and the Central Bank of Japan to support household spending and encourage inflation. Until the remuneration of employees significantly increases, monetary policy in Japan will remain challenging.

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