BOJ’s tankan to show third quarter manufacturers’ mood slightly lower than second quarter

(Corrects a typographical error in paragraph 8)

TOKYO (Reuters) – Business confidence among major Japanese manufacturers likely fell in the third quarter as the highly contagious variant of COVID-19 Delta hit business and consumer activity, the Tankan survey of the closely watched central bank.

Other data should show that nationwide consumer staples prices were flat in August compared with the same month a year earlier, as higher energy costs and overnight stays offset lower prices. mobile phone charges, analysts said.

The Bank of Japan’s (BOJ) quarterly Tankan survey of business sentiment is expected to show the overall large manufacturers sentiment index fell to 13 from 14 in June, according to the poll of 17 economists on Friday.

“Sales of durable goods have been strong so far, offsetting a decline in the consumption of services,” said Takeshi Minami, chief economist at the Norinchukin Research Institute.

Reduction in production by automakers due to a global chip shortage and parts supply difficulties due to the explosive growth of the COVID-19 Delta variant in Southeast Asia in the wake of the summer activity, he said.

The mood among large non-manufacturers was also likely to ease slightly, but avoid slipping into clear pessimism, coming back flat from plus 1 in June, according to the poll.

The forecast was in line with a recent data set – 14 which shows that companies are facing new headwinds from the pandemic, which remain particularly painful for companies in the service sector.

This week’s data showed the country’s exports to be extensive 09-16 double-digit gains in August, although the pace of growth weakened as COVID-19 hit major supply chains in Asia and slowed factory output.

Japan’s economic growth slows in current April to June quarter in part because of these disruptions, even as vaccination rates across the country improve and daily COVID-19 infections appear to have peaked.

For the next three months, optimism among large manufacturers is expected to improve slightly to 15, while the outlook index for large non-manufacturers is expected to rise to plus 5, according to the poll.

Large companies are likely to increase their capital spending plans by 9.1% for the current year as the outlook improves.

The BOJ will announce the results of the quarterly tankan survey at 8:50 a.m. on October 1.

The central bank is ready to maintain its massive stimulus on its September 21 – 22 political meeting, as supply bottlenecks caused by factory closures in Asia and low consumption weigh on the economy.

Separate data due Sept. 24 is expected to show nationwide basic consumer prices, which exclude fresh food but include petroleum products, were flat in August compared to the previous year, according to the poll.

(Corrects a typographical error in paragraph 8)

(Reporting by Daniel Leussink; Editing by Sam Holmes)

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