TOKYO (Reuters) – Japanese manufacturers’ confidence sank in the second quarter to levels not seen since the 2009 global financial crisis, underscoring the damage the coronavirus pandemic inflicted on the export-reliant economy.

The Bank of Japan’s “tankan” survey also showed big non-manufacturers’ mood tanked to a decade low, as lockdown measures put in place through May forced businesses to shut and consumers to stay at home.

The dismal readings reinforce expectations Japan is headed for deep recession due to the fallout from the pandemic.

“Industries across the board seemed to have been hit hard by a sharp decline in demand, underscoring the extensive damage caused by the coronavirus pandemic,” said Hiroshi Shiraishi, senior economist at BNP Paribas Securities.

The headline index for big manufacturers’ sentiment hit -34 in June, worse than a median market forecast for -31 and the lowest level since June 2009. The 26-point drop from March was the second-fastest pace of decline on record.

The index measuring big non-manufacturers’ sentiment fell 25 points to -17 in June, the worst reading since December 2009.

Big firms expect to increase capital expenditure by 3.2% in the year to March 2021, exceeding market estimates of a 2.1% gain but lower than the plans made three months ago.

“There’s a chance big firms may revise down their spending plans,” said Shinichiro Kobayashi, senior economist at Mitsubishi UFJ Research and Consulting. “The pace of any economic recovery will be slow.”

In a sign the gloom is affecting the jobs market, companies expect to slash new hires by 5.6% in fiscal 2021 from a year ago, which would be the first drop since 2010.

Among big firms, sentiment hit record lows for restaurants, hotels and machinery makers. But supermarkets, home centres and retailers saw conditions improve on demand for “stay-at-home” and teleworking goods, a BOJ official told a briefing.

Japan slipped into recession for the first time in 4-1/2 years in January-March and is set to suffer its deepest postwar slump in the current quarter.

Reporting by Leika Kihara and Tetsushi Kajimoto; Editing by Sam Holmes

Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like

Chinese companies stabilize global supply chain despite the virus

GUANGZHOU — Days after Chinese company Xinbao shipped out a batch of OEM products including coffee machines and ice makers in February, it receives a thanks letter from General Electric Company (GE), praising its on-time delivery. As one of the…

Wall Street tumbles as coronavirus fears mount

(Reuters) – U.S. stock indexes fell about 1% on Thursday, dragged down by technology heavyweights, as investors fretted over a rise in the cases of coronavirus and its economic impact. Some traders pointed to a Global Times report here that…

Luxury retailer Neiman Marcus files for bankruptcy

Iconic luxury department store chain Neiman Marcus filed for bankruptcy on Thursday, the second major retailer after J.Crew to seek reorganization this week as the industry buckles under widespread store closures. “Like most businesses today, we are facing unprecedented disruption…

Stocks drift as second wave virus fears mount

LONDON/TOKYO (Reuters) – Global stocks drifted on Thursday as spiking coronavirus cases in some U.S. states and China crushed hopes of a quick global economic comeback from the pandemic. Several U.S. states including Oklahoma, where President Donald Trump plans a…