Japanese merchants' business sentiment fell to three-year low

Sentiment among Japanese merchants fell to its lowest level in more than three years, indicating their growing concern about the economic outlook at home and abroad amid the impact of US import tariffs.

A gauge of confidence among store managers, taxi drivers and others in direct contact with Japanese consumers fell 2.5 points to 42.6 in April. The data was released by the country's finance ministry. A score below 50 indicates the prevalence of pessimistic sentiment among those surveyed.

As Bloomberg notes, the decline in the index reflects the growing concern among entrepreneurs in Japan following a series of statements on imposing tariffs in the US. The country's largest companies have already begun to reduce their earnings forecasts for this year.

Deteriorating sentiment among retailers and service providers is also caused by the steady rise in prices, the news agency points out. Headline inflation in Japan has been at or above the Bank of Japan's 2% target for nearly three years, adding to the pressure on household finances.