TOKYO, July 1 (Xinhua) -- Japan's large manufacturers' business confidence improved to its highest level since December, as demand in overseas economies staged a comeback, despite the global semiconductor shortage weighing on the situation, the Bank of Japan (BOJ) said in its Tankan survey report on Thursday.
The sentiment index increased to 14 from 5 in March, for the fourth successive quarter of improvement, the BOJ said in its report.
Looking ahead, however, the sentiment index for large manufactures is expected to fall from 14 to 13, amid fears over the further spread of the Delta variant of the coronavirus and ongoing concerns over the global chip crunch, which has particularly hampered the auto industry among others.
In addition, the index is also likely to reflect concerns over falling global and domestic consumption and a possible decline in domestic economic activities if further restrictions on people's movements are requested by governments commensurate with the spread of the Delta and other virus variants.
On the domestic front, this could include lockdowns imposed if the number of COVID-19 cases spike to a point the government has no choice but to once again declare a state of emergency over the situation again, or issues enhanced stay at home orders, with the Olympic Games set to begin in Tokyo in a matter of weeks.
The index for large non-manufacturers, meanwhile, including the virus-hit service sector, increased to 1 from minus 1 in the March survey, turning positive for the first time in five quarters, Japan's central bank said in its latest quarterly report.
The indexes reflect the percentage of companies reporting favorable business conditions minus the percentage of those reporting unfavorable conditions.
The BOJ's Tankan survey is regarded as a leading indicator of Japan's economic health and serves as a guide for the central bank regarding the future direction of its monetary policy.
The central bank's latest Tankan survey polled 9,407 firms and had a 99.2 percent response rate.
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