Sentiment among large Japan firms falls again due to chip shortage and virus

Business sentiment among large Japanese companies in the April-June period worsened for the second straight quarter due to a global semiconductor shortage and a third state of emergency over the coronavirus pandemic, a government survey showed Friday.

The confidence index covering firms capitalized at ¥1 billion or more inched down to minus 4.7 from minus 4.5 in the January-March period, staying negative for the second quarter in a row, according to the joint survey by the Finance Ministry and Cabinet Office.

By sector, the index for manufacturers dropped to minus 1.4 from plus 1.6 in the previous quarter, turning negative for the first time in four quarters.

Cuts in car output caused by a global chip shortage significantly worsened sentiment among auto-related firms and some other manufacturers, a government official told reporters.

The auto industry has been grappling with the semiconductor crunch, partly caused by the pandemic boosting demand for laptops and game consoles that use chips and partly due to supply disruptions caused by massive blackouts in Texas following unusually cold weather in February and a fire at a Renesas Electronics Corp. plant in Japan in March.

The index for nonmanufacturers remained negative, although it improved to minus 6.2 from minus 7.4.

The official said the sector was affected by the nation’s third virus emergency under which requests are made for restaurants and bars serving alcohol to suspend operations, other dining establishments to close early, and encourages people to stay home.

The government declared an emergency in late April for Tokyo, Kyoto, Osaka and Hyogo. Amid a surge of COVID-19 infections driven by highly contagious virus variants, the measure has been repeatedly extended and now covers 10 prefectures, with the current end date set for June 20.

The survey figures are calculated by subtracting the percentage of firms reporting worsening conditions from those observing improvements.

For smaller firms, the indices saw the first improvement in two quarters but remained negative. For midsize companies capitalized at ¥100 million or more but less than ¥1 billion, the figure came to minus 9.0, compared to minus 15.2 in the January-March period.

The index for small firms capitalized at ¥10 million or more but less than ¥100 million stood at minus 25.5, up from minus 31.4.

Looking ahead, the index forecasting business conditions for large companies in the three months through September was plus 7.7, and that for the following quarter came to plus 8.4.

The survey covered 14,735 companies capitalized at ¥10 million or more, of which 11,133, or 75.6%, responded by May 15.

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