Business sentiment in japan is recovering slower than expected in a worrying sign that the bounce back from covid-19 will take longer than hoped.
The closely watched tankan survey of large manufacturers rose by only seven points from -34 to -27 in the third quarter, compared with consensus expectations of -23.
The figures suggest japanese companies are still struggling and the shock from covid-19 is calcifying into a more traditional economic downturn.
Japans economy shrunk by a record 7.9 per cent in the second quarter of 2020 but there were still hopes for a rapid rebound, with covid-19 largely under control in east asia.
The tankan, compiled by the bank of japan, is regarded as the best guide to the state of the countrys economy and the central bank relies on it heavily when making policy decisions. the survey covers almost 10,000 companies with a response rate of more than 99 per cent.
Companies are asked whether business conditions are favourable or unfavourable and one number is subtracted from the other, giving a result that can range from -100 to +100, where higher figures suggest a stronger economy.
Industry remained weak across the board, with the iron and steel sector reporting an index of -55, japans important automobile industry at -61 and production machinery weakening to -43. japan is a big supplier of capital equipment to china.
The situation in the services sector was more optimistic, with construction up six points to +21, retailing rising 16 points to +18 and communications up 13 points to +21. but the hotel and restaurant sector was still mired at a dire reading of -87.
Marcel thieliant, senior japan economist at capital economics, said the survey suggested that economic recovery could be protracted, but japans stimulus was working to keep financial conditions easy and allow companies to borrow.