The Bank of Japan's index for big manufacturers' sentiment diminished to 9 in the second quarter of 2022 from 14 in the previous quarter, hit by war-driven rising input costs and supply disruptions and China's strict COVID-19 lockdowns.
The figure is below market expectations of 13 and the lowest since March 2021.
The sentiment softened mainly among firms producing ships and heavy machinery (-19), motor vehicles (-19), food and beverages (-11), textiles (-10), pulp and paper (-7), and iron and steel (-6).
Japan's economy likely stalled in the current quarter, with recent data showing the country's factory output fell the most in two years in May.
Japanese households and businesses have also been asked to conserve electricity for three months to stave off a power crunch amid a record-breaking heat wave, the first time in seven years that the government has made such a request.
Manufacturing PMI in the country slumped to 52.7 in June 2022, the lowest figure in four months. -
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