Confidence of Japanese manufacturing companies improves but industry outlook is unclear

A Reuters poll showed confidence among Japanese manufacturing companies returned to their highest level since the financial crisis, but overall sentiment remained fragile as companies worried about deflation and a lack of domestic demand. The survey of 400 large companies by Reuters showed that the confidence index of the manufacturing industry rose by 8 points to negative 19, and is expected to continue to rise by 3 points to negative 16 in April this year. However, confidence in major export industries such as automobiles has declined due to concerns that export profits will be eroded due to the strengthening of the yen. An executive of a transportation machinery manufacturing company who participated in the poll believes that although the Japanese economy has entered a recovery track, concerns about deflation and a rising yen exchange rate still exist. In addition, the survey results also showed that the confidence index of Japan's service industry rose by 5 points to minus 34, still hovering at a low level, and is expected to rise to minus 31 in April. Confidence among both Japanese manufacturing and non-manufacturing companies will improve over the next three months, but the recovery will be slow. The Reuters survey will serve as one of the main indicators of the quarterly short-term economic observation survey for companies conducted by the Bank of Japan. The index derived from the survey is the difference between the proportion of companies that say the economy is in 'good' condition and the proportion of businesses that say it's in a 'bad' situation. If the final number is positive, it indicates an optimistic judgment, and if it is negative, it indicates a pessimistic judgment.