Japan's business confidence hits two-year low as trade war stings

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Japan's business mood slumped to a two-year low in the March quarter, a cen...

TOKYO - Japan’s business mood slumped to a two-year low in the March quarter, a central bank survey showed, underscoring concerns that Sino-U.S. trade tensions and softening global demand were taking a toll on the export-reliant economy.

Separately on Monday, a private business showed manufacturing activity in Japan contracted for a second straight month in March, with output down at the sharpest rate in nearly three years. “We see overall weak numbers and the outlook is worsening, reflecting the slowdown in Japan’s economy,” said Hiroshi Miyazaki, senior economist at Mitsubishi UFJ Morgan Stanley Securities.

The index for non-manufacturers fell to plus 21 from plus 24 in the December survey, hitting the lowest level since March 2017 and undershooting a market forecast of plus 22. But indices measuring price developments show companies are unable to raise prices of their goods much even as a tightening job market pushes up labor costs, a development that could hurt their spending appetite ahead.

Factories across Japan depend heavily on Chinese customers, the world’s second-biggest economy, to buy their products, especially the parts and equipment that reach China’s manufacturers.

 

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