Japan Big Firm Biz Sentiment Worsens in April-June

Tokyo, June 11 (Jiji Press)–Business sentiment among major Japanese companies fell in April-June, marking the first negative figure in four quarters, a government survey showed Thursday. According to a joint survey by the Finance Ministry and the Cabinet Office, the business sentiment index for companies with capital of 1 billion yen or more stood at minus 0.5, falling from plus 4.4 in the previous quarter amid the deteriorating situation in the Middle East. The index for major manufacturers decreased to minus 1.8 from plus 3.8, driven by rising material prices linked to supply concerns and higher prices of crude oil and naphtha. Sentiment worsened to minus 19.4 in the automobile and auto parts industries and to minus 7.4 in the food manufacturing sector. The index for major nonmanufacturers stood at plus 0.027, down from plus 4.6. Although sentiment in the finance and service industries was solid, that in the construction sector fell to minus 10.9 due to concerns over rising costs amid the Middle East situation. The index for small businesses fell to minus 17.6. Looking ahead, large companies in all sectors expect a recovery, projecting plus 4.3 for July-September and plus 4.5 for October-December. In fiscal 2026, sales across all business sizes and industries are expected to grow 3.3 pct, driven by progress in moves to reflect higher costs in sales prices and strong demand related to artificial intelligence. However, overall ordinary profits are projected to decline 2.4 pct due to rising raw material and personnel costs. Capital investment is expected to rise 8.2 pct. The business sentiment index represents the proportion of companies seeing their business conditions improve compared with the previous quarter minus that of firms feeling the opposite. The survey was based on data collected as of May 15. END [Copyright The Jiji Press, Ltd.]