The Bank of Japan (BOJ) announced today that the confidence index of Japan’s largest manufacturers fell for the first time in seven quarters in the first quarter of 2022. The reason for this is the rising cost of energy and raw materials.
Japan’s key manufacturers’ confidence index (Tankan) for Q1/2022, which includes automakers and electronics manufacturers, fell to +14, the lowest level since June 2021 from +17 in Q4/21.
The producer sentiment index exceeded analysts’ forecasts of +11.
The non-manufacturing business confidence index, including services, was +9 in 1Q22, down from +10 in 4Q21. The non-manufacturing business confidence index also fell for the first time in seven quarters.
In addition, the yen has fallen sharply against major currencies such as the dollar and the euro. As a result, the cost of importing raw materials into Japan has risen, affecting the profits of private companies.
The BOJ said that its second-quarter manufacturing sentiment index is likely to fall to +9 and the non-manufacturing confidence index to +7.