By Kantaro Komiya

TOKYO (Reuters – The Japanese manufacturer’s confidence index rose to a 4-month high in December due to supply constraints. On Wednesday, the Reuters Tankan revealed, giving policymakers hope for a mild recovery.

The December mood among non-manufacturers was also better, suggesting that consumers were slowly recovering following the lifting of social restraints at end September in order to stop the spread of coronavirus.

These findings are positive for government efforts to lift Japan from its slump caused by the pandemic, including a record $490billion stimulus package.

The poll that was taken between Nov. 24-Dec. 3 did not include any effects from Omicron’s new variant.

This monthly survey, which closely tracks the Bank of Japan (BOJ), quarterly Tankan survey due Dec. 13th, showed that the manufacturer’s sentiment index rose to 22 in December after three months of declining to 13. Compare that to the 18 reading in October’s BOJ survey.

Manager of a precision machine company said, “In terms the fallout from pandemics, we may not have passed the worst.”

An index that measures non-manufacturer sentiment increased to 6 from 1 in November. This is the highest reading since February 2020, the date when the Japan pandemic hit.

Both manufacturers and service companies are more positive about the future, with the 3-month forward index for manufacturers increasing to 26 from 19, and 21 from 15, respectively.

However, non-manufacturers were more optimistic than others. Some sectors still suffered from the scars of the pandemic like those that offer services to customers face-to–face including travel and retail.

Manager at a service firm stated, “Travel and leisure requirements haven’t being restored, but (consumers) are feeling more relaxed.”

The Reuters Tankan poll increases the chances that December’s BOJ Tankan survey will demonstrate a continued improvement in business conditions.

At its December 16-17 meeting the central bank will likely keep its monetary policy stable. There, it will discuss its fate and pandemic relief programmes.