Japan manufacturers' mood sours in March over Trump tariffs, Chinese economy

Reuters

18-03-2025

Summary
Manufacturers sentiment index -1 in March vs +3 in February
Index for non-manufacturers falls to +25 from +30
Manufacturers index seen at +4 in June, non-manufacturers at +28
For table of results, please click here
TOKYO, March 19 (Reuters) - Business sentiment among Japanese manufacturers in March worsened for the first time in three months into negative territory on concerns about U.S. tariff policies and weakness in China's economy, a Reuters Tankan poll found.
The poll, which tracks the BOJ quarterly business survey, showed the manufacturers' index at minus 1 in March, down from plus 3 in February. It marks the first negative reading since December when it was also minus 1.
A negative figure means pessimistic respondents outnumber those optimistic about the business outlook.
Later in the day, the central bank will end a policy meeting with expectations high that its key rate will be kept at 0.50% as board members assess the risks to Japan's export-reliant economy posed by U.S. tariffs on many of its major trading partners.
"Although we recognise that the long-term demand environment is strong, there may be fluctuations in short-term customer trends," wrote a manager at a nonferrous metal maker in the survey, citing the impact of the uncertainty surrounding tariffs.
Others noted a stagnant Chinese economy had meant fewer orders.
"Orders that had been mainly from China are now being replaced by production in Japan and other overseas locations," a manager at a chemical firm wrote.
"Orders from these locations are increasing, but they haven't yet gotten to the point where they contribute to significant sales," the manager added.
The March 5-14 poll of large non-financial companies was conducted by Nikkei Research for Reuters with 225 firms responding on condition of anonymity.
The service-sector sentiment index fell to plus 25 in March from plus 30 in February, a second month of decline.
"We were unable to pass on all the higher costs of labour, work and transport, and there was a decrease in distribution volume due to rising prices," a transport firm manager wrote.
Sentiment was somewhat more upbeat for three months ahead with the manufacturers index seen at plus 4 in June and the non-manufacturers index seen at plus 28.