Japanese manufacturing confidence hits a four-year high, but Middle East risks weigh on outlook

Golden Ten Data reported on March 18 that a Reuters Tankan survey showed that, driven by the chemical and oil industries as well as the recovery of the semiconductor market, Japanese manufacturers’ confidence in March rose to its highest level in more than four years. However, Middle East conflicts, rising costs, and weak demand continue to put pressure on the outlook. The manufacturing sentiment index rose to 18 in March, the highest level since December 2021. The chemical industry confidence index jumped to 21, mainly driven by increased demand in chip-related industries. The oil and ceramics industry index rose to 25, and the transportation machinery industry confidence index climbed to 36. Some industries lagged behind, with the confidence index for textiles, paper, and pulp dropping sharply from 20 to 11. A manager from a paper and pulp company said: "The US-Iran conflict has made customers adopt a wait-and-see attitude, making future demand difficult to predict." Confidence in the steel and non-ferrous metals industries remains deeply negative at -25, with weakening steel orders related to automobiles considered the main reason. The non-manufacturing sentiment index remained unchanged at 25 in March.