Tokyo (Japan), October 3: Business sentiment among large Japanese companies deteriorated for the third straight quarter, dropping from 9 three months earlier to 8 in September, owing to rising prices for raw materials, the Bank of Japan (BOJ) said in its Tankan report Monday.
Meanwhile, the sentiment index gauging confidence among non-manufacturers improved to 14 from 13 in the previous survey, rising for the 2nd consecutive quarter, on the back of economic activity picking up commensurate with the government's scraping of antiviral measures that had previously restricted some business practices.
Rising prices for energy and commodities have been compounded by the yen's rapid decline versus its major counterparts, which adds inflationary pressure to raw materials, the central bank also said.
The yen has been falling sharply against major currencies such as the U.S. dollar and the euro, inflating the cost of imported raw materials.
As such, with profits being eroded by rising costs, sentiment among firms reliant on raw materials and commodities from overseas, such as pulp and lumber to chemicals and food all deteriorated notably, the BOJ's report showed.
Looking ahead, the BOJ said that over the next three months, manufacturers' sentiment is set to improve slightly to 9, and the mood among non-manufacturers will likely drop to 11, as higher import costs weigh.
The Tankan index portrays the percentage of companies reporting favorable conditions minus the percentage reporting unfavorable ones.
Source: Xinhua
