Confidence among Japan's biggest manufacturers fell sharply this quarter, the Bank of Japan's quarterly business survey showed today, suggesting a stuttering recovery for the world's third-largest economy.
The central bank's April Tankan report – a quarterly survey of about 10,000 companies – showed a reading of 12 among major manufacturers, a steep fall from 19 in the previous quarter.
Economists say a slowdown in the Chinese economy was partly to blame, with worries that a rise in crude oil prices could eat into profits also weighing on business confidence.
The index for non-manufacturers slipped to 21 from 24 in the previous quarter.
The Tankan report, the broadest indicator of how Japan Inc is faring, marks the difference between the percentage of firms that are upbeat and those that see conditions as unfavourable.
Japan's economy grew a modest 0.5% quarter-on-quarter at the end of last year.
However, the cabinet office has recently revised down its judgement on the economy as a separate business confidence index declined in January for the third straight month.
Analysts have also warned that US-led trade wars could be a major risk factor for the Japanese economy still struggling to win a long battle against deflation.