Improvement in Business Sentiment Among Japanese Non-Manufacturing Large Corporations... Effects of COVID-19 Containment

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] The business sentiment of non-manufacturing large corporations in Japan has noticeably improved. This is attributed to the easing of the COVID-19 spread within Japan and the lifting of the state of emergency.

According to the results of the December "Tankan (Short-Term Economic Survey of Enterprises in Japan)" released by the Bank of Japan on the 13th, the Diffusion Index (DI) indicating business sentiment for manufacturing large corporations recorded 18, the same level as the previous survey in September.

On the other hand, the DI for non-manufacturing large corporations rose by 7 points to plus 9, marking the highest level since the December 2019 survey (20).

Thus, the DI for non-manufacturing large corporations has improved for six consecutive quarters.

The DI is an index calculated by subtracting the percentage of companies responding "bad" from those responding "good" regarding business conditions. A positive index means that more respondents view the economic situation optimistically.

In this survey, conducted over a month from the 10th of last month targeting 9,328 companies nationwide (response rate 99.3%), the significant improvement in the DI for non-manufacturing large corporations is analyzed to be due to better business conditions in the accommodation and food service sectors following the lifting of the COVID-19 state of emergency.

The Japanese government fully lifted the fourth state of emergency, which had been in effect since July 12 in Tokyo and other areas to suppress the spread of COVID-19 ahead of the Tokyo Olympics opening, starting in October as new infections decreased.

In this survey, among the 12 detailed non-manufacturing sectors, 9 sectors showed improvement in their indices.

The DI for the personal services sector, including amusement parks and wedding hall operations, recorded minus 9 but surged by 36 points compared to the survey three months ago.

The accommodation and food service sector remained at minus 50 but improved by 24 points in three months.

In manufacturing, among the 16 detailed sectors, 8 sectors such as automobiles, which faced production disruptions due to semiconductor parts shortages, deteriorated, but 6 sectors including business machinery improved.

The DI for all sectors of small and medium-sized enterprises rose by 5 points in this survey but still remained in the negative zone (-3).

Meanwhile, Kyodo News pointed out that about 80% of the companies responding to this survey completed their answers before the confirmation of the new COVID-19 variant Omicron, so the impact of Omicron was not properly reflected.

This content was produced with the assistance of AI translation services.