Japan ‘tankan’ survey shows manufacturers upbeat on outlook

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Tokyo: Japan “tankan” survey shows manufacturers upbeat on outlook Business sentiment among Japanese manufacturers has risen to its highest level in nearly three years, according to a quarterly survey by the central bank.

The results of the Bank of Japan’s tankan survey, released Friday, found sentiment among large manufacturers rose to 18 from 14. That’s the highest level since late 2018.

The reading for non manufacturers edged up only slightly, to 2 from 1.

The tankan measures corporate sentiment by subtracting the number of companies saying business conditions are negative from those responding they are positive.

The report comes as Japan on Friday ended a state of emergency in many areas, including Tokyo, after new coronavirus infections began falling.

The world’s third-largest economy was in the doldrums even before the pandemic hit in several waves that have crimped business activity.

The survey found that shortages of components such as computer chips are constraining the recovery.

Manufacturers are running down their inventories, and in some cases suspending production at some factories in response.

Such low inventory levels were last seen during the 1980s bubble. Among wholesalers, inventory levels fell to an all-time low,” Marcel Thieliant of Capital Economics said in a report.

He noted that production capacity dipped slightly in the latest survey, with room for improvement.

One positive result of the shortfalls is that some manufacturers are investing in factory equipment: large manufacturers forecasted a 10% increase in capital spending, which was the strongest outlook since the same quarter in 2018.