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Japan Business Mood at 2.5Y High as COVID Hit Eases Tankan

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TOKYO Reuters Japanese big manufacturers business confidence improved in the second quarter to hit a twoandhalfyear high, a central bank survey showed, a sign solid global demand was helping the economy emerge from the coronavirus pandemicinduced doldrums.

Servicesector sentiment also turned positive for the first time in five quarters, the Bank of Japans BOJ Tankan survey showed, indicating that the economic recovery was broadening even as Japan struggles to contain a fresh wave of coronavirus infections.

Companies expect to increase capital expenditure in the year that began in April as profit recovers from last years slump, offering hope among policymakers who project growth to accelerate in the latter half of this year.

The further rebound in the Q2 Tankan supports our view that the economys disappointing start to the year wont prevent vaccines driving a strong rebound in the second half of the year, said Tom Learmouth, Japan economist at Capital Economics.

The headline index for big manufacturers sentiment jumped to plus 14 in June from plus 5 in March, improving for the fourth consecutive quarter and hitting the highest level since December 2018, the survey showed on Thursday.

Nonmanufacturers mood also improved to plus 1 from minus 1 in the previous survey, to reach its highest index reading since March 2020, as goods distribution and leisure industries saw activity gradually resume after disruption caused by COVID19.

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