By Makiko Yamazaki
TOKYO (Reuters) – Business sentiment for Japanese manufacturers climbed for a second straight month in February and is expected to have improved again by May, albeit modestly, the Reuters Tankan poll found.
The results follow data this week that showed the economy grew at a faster-than-expected annualised rate of 2.8% in the October-December quarter on gains in business spending and a surprise increase in consumption.
The manufacturers’ sentiment index for February improved to plus 3 – its highest level since November – from plus 2 in January. It is seen rising to plus 5 in May.
The recovery in mood was led by the food and chemicals sectors.
“There’s been a pause in yen weakness and surges in materials costs, while selling prices have picked up slightly,” a manager at a food company wrote in the survey.
But some materials industries including paper, pulp and steel saw sentiment deteriorate in February.
The Reuters Tankan indexes are calculated by subtracting the percentage of pessimistic respondents from optimistic ones. A negative figure means pessimists outnumber optimists.
In the poll’s written comments section, managers expressed concern about U.S. President Donald Trump’s wide-ranging plans to hike tariffs.
“Our clients have turned cautious about capital spending due to worries about potential escalation of Sino-U.S. trade friction, the stagnant Chinese economy and rising inflation,” a manager at a machinery firm wrote.
The poll was conducted by Nikkei Research for Reuters February 4-14. More than 230 firms responded to this month’s poll of 505 big non-financial Japanese companies, which take part on condition of anonymity.
The service-sector sentiment index dipped to plus 30 in February from plus 31 in January, with the construction and real estate sectors leading declines. It is expected to stay flat in May.
“Rising labour costs are pressuring operating profits,” a construction firm manager wrote. “A rise in costs is outpacing price hikes,” wrote another.
(Reporting by Makiko Yamazaki; Editing by Edwina Gibbs)
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