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Japanese manufacturers show weakening confidence in economy

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TOKYO (AP) — A closely watched quarterly survey by Japan’s central bank released Monday showed declining confidence in the economic outlook among major manufacturers as trade tensions between the U.S. and China add to worries over regional and global growth.

The Bank of Japan’s weak “tankan” reading was the second straight quarter of deterioration amid worries over trade tensions and a regional slowdown.

The survey’s index for major manufacturers fell to 7 in June from 12 in the March survey.

The index shows the percentage of companies reporting positive conditions minus the percentage reporting unfavorable ones.

Although hopes for progress in resolving the festering dispute between Washington and Beijing revived with an agreement between President Donald Trump and China’s Xi Jinping to resume trade negotiations, the outcome is far from certain. The easing of tensions after Trump and Xi met at the Group of 20 summit in Osaka, Japan, was welcome relief for world markets, but worries remain.

Japan, the world’s third-largest economy, has struggled to sustain growth as its population ages and declines.

But while the tankan reading for large manufacturers was worse than expected, conditions for non-manufacturers improved slightly, while the “all industry” index slipped to 10 from 12.

“Given that the change rather than the level tends to be the best guide to GDP growth, that suggests the economy may have passed its low point,” Marcel Thieliant of Capital Economics said in a commentary.

Copyright 2020 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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