Japan business mood improved but global problems influence outlook

Japanese big manufacturers’ business confidence improved in December for the first time in four months. Non-manufacturers’ sentiment also rose, to reach its highest index reading for three years, a Reuters survey showed. Given the data, Japan is on track for a steady recovery from the pandemic. 

At the same time, big companies that operate in the manufacturing sector expect business conditions to remain unchanged over the next three months. By contrast, the service-sector forecast is worsening. These contradictory estimates point to the uneven economic recovery.

The index for big manufacturers’ sentiment jumped to +8 in December from +2 in November, improving for the first time since August.

Non-manufacturers’ mood increased to +25 from +20 in November, hitting the highest level since October 2019.

Despite the fact that indexes posted an improvement, respondents had some concerns about the outlook.

They expect business confidence to hold steady at +8 over the next three months. According to the estimates, non-manufacturers' sentiment index will be at +20, which is 5 points below the December reading.