Sentiment among Japan's big manufacturers wallows at multi-year lows

Bank of Japan's (BoJ) closely watched Tankan report released on Monday, October 3, showed that confidence among Japan's largest manufacturers is at its lowest since the nation introduced measures to kick-start the struggling economy more than 3 years ago.

BoJ's latest Tankan survey missed market forecasts for a slight improvement in the mood among major firms. The reading for big manufacturers was unchanged at 6, while the level for big non-manufacturers fell to 18 from 19. However, confidence among medium and small business improved slightly.

Tankan data follows weak showing in Q2 growth and as soft inflation and spending figures on Friday, September 30, underscored the wobbly recovery. On Friday last week, official data showed spending among Japanese households tumbled in August and consumer prices fell again – putting BoJ's 2.0 percent inflation target at risk.

"I'm sure the Bank of Japan was hoping for a rebound in the latest Tankan – they must be in agony looking at this report," said Hideo Kumano, an economist at Daiichi Life Research Institute and a former BoJ official.