Japan business sentiment is restrained by external risks

In June, Japanese manufacturers’ confidence edged down, while service-sector sentiment fell from three months ago on poor consumption, as survey conducted by the country’s major bank shows.  Undoubtedly, these are quite downbeat signs for a fragile economy grappling with a weakening yen, to say nothing of weak overseas demand.  

The outcome of this poll could have been much worse it had captured gloomy sentiment from the recent Brexit vote, that spread turmoil in the financial world and applied pressure to the Bank of Japan, urging this financial institution to expand its stimulus a bit later this month. 

Friday’s separate data showed that household spending dipped for the third straight month in May, while core consumer prices suffered their greatest annual drop since 2013, thus keeping policymakers under great pressure to do more to stimulate growth.

Worsening sentiment for non-manufacturers points out to quite weak demand. It gives the government a fair incentive to boost stimulus spending. 

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