Japan’s manufacturer sentiment has risen to its highest level in 7 months

Japanese manufacturers’ business sentiment improved in August after the downturn in July. Service sector sentiment rose for the second month to its highest level in almost 3 years.

Prospects for further recovery are weakening due to inflationary pressures, the renewed rise in COVID-19 cases in Japan, and weak supply dynamics for key components such as semiconductors.

Japan’s Major Producer Sentiment Index (Tankan) rose to 13 in August from 9 in July, its highest level in 7 months.

The service sector sentiment index rose to 19 in August from 14 in July, the highest level since October 2019.

As for the sentiment index for the next three months, manufacturers expect sentiment to rise two points to 15 by November, while service companies expect the confidence index to remain stable at 19.

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