Business sentiment among large Japanese manufacturers in June plunged to the lowest level since June 2009 due to the economic fallout from the novel coronavirus pandemic, the Bank of Japan’s tankan survey showed Wednesday.
The key index measuring confidence among companies including carmakers and electronics firms plummeted to minus 34 from minus 8 in March, marking the lowest number since the 2008-2009 global financial crisis. The result was weaker than the average of minus 31 forecast in a Kyodo News poll.
The global spread of COVID-19 has forced many manufacturers in the country to temporarily halt production due to the disruption of supply chains and falling demand for products.
The domestic production of eight major domestic automakers in May fell a record 61.8 percent from a year earlier to 287,502 vehicles due to factory closures and weak demand, the companies said Monday.
The index for large nonmanufacturers, including the service sector, dived to minus 17 from 8 in the March survey, compared to the market consensus of minus 18.
The deterioration stemmed primarily from the fact that people refrained from actively going out, even after the government completely lifted a nationwide stay-at-home request in late May.
The BOJ decided at its June policy meeting to further boost its ¥75 trillion ($700 billion) corporate support measures to ¥110 trillion, in line with the government’s ¥31.91 trillion second extra budget to spur the country’s economy, including new programs focusing on assistance for small businesses.
However, the tankan survey showed many companies remain in a severe economic environment amid concerns over a possible second wave of the virus, despite the efforts made by the central bank and the government.
The tankan index represents the percentage of companies reporting favorable conditions minus the percentage reporting unfavorable ones.