Business sentiment among large Japanese companies in the April-June period hit the lowest level in 11 years amid fallout from the coronavirus pandemic, a government survey showed Thursday.

The confidence index covering firms capitalized at 1 billion yen ($9.3 million) or more plunged to minus 47.6 from the previous quarter's minus 10.1, for the third consecutive quarterly decline, the joint survey by the Finance Ministry and Cabinet Office showed.

Commuters head to work near Tokyo Station on May 25, 2020. (Kyodo)

The index was the lowest since the first quarter of 2009 when it came to minus 51.3 amid the global financial crisis following the collapse of Lehman Brothers Holdings Inc. the previous year.

The latest figure was also worse than the minus 22.0 logged in the April-June quarter of 2011 after a massive earthquake and tsunami hit northeastern Japan in March that year.

The index is calculated by subtracting the percentage of firms reporting worsening conditions from those observing improvements.

"We regard this result as reflecting the extremely severe condition of the economy as a whole due to the coronavirus," a government official told reporters.

The survey covered 14,522 companies capitalized at 10 million yen or more, of which 10,211, or 70.3 percent, responded by May 15.

The response rate was about 10 percentage points lower than usual, as some firms apparently failed to answer in time due to the spread of telework and the virus impact, according to the official.

In Japan, a state of emergency was declared in April and authorities requested people to refrain from going out and nonessential businesses to close temporarily.

Following a downward trend in the number of new COVID-19 cases, the emergency declaration was fully lifted on May 25.

By sector, the large nonmanufacturers' index was at minus 45.3, down from minus 6.6 in the January-March quarter and hitting the lowest level since comparable data became available in the April-June quarter of 2004.

Sentiment deteriorated particularly in the tourism and entertainment industries, which have seen significant drops in the number of customers due to the pandemic, the official said.

The index for large manufacturers plunged to minus 52.3 from minus 17.2 logged in the previous quarter to hit the lowest level since minus 66.0 in January-March of 2011. Worsening business confidence at car producers and auto-related makers contributed most to the overall result, according to the official.


The index for small firms capitalized at 10 million yen or more but less than 100 million yen also fell sharply to minus 61.1 for the reporting quarter on an all-industry basis from minus 25.3 in the previous three-month period.

For midsize companies capitalized at 100 million yen or more but less than 1 billion yen, the index dropped from minus 13.1 to minus 54.1.

Both the results for small firms and midsize companies marked the lowest levels since the second quarter of 2004, according to the official.

Looking ahead, the index forecasting business conditions for large companies in the three months through September stood at minus 6.6, downgraded from plus 4.2 in the previous survey, which reflected sentiment as of Feb. 15.

The downward revision was possibly linked to the one-year postponement of the Tokyo Olympics and Paralympics, which were originally scheduled for this summer.

The outlook figure for the following quarter through December came to plus 2.3.