By Tetsushi Kajimoto
TOKYO (Reuters) -Business confidence among big Japanese manufacturers fell for a second straight month to hit its lowest level in five months, a Reuters monthly poll showed on Wednesday, in another sign global inflation and a weak yen are taking a toll on the world's No.3 economy.
The monthly poll, which tracks the Bank of Japan's (BOJ) closely watched tankan quarterly survey, found manufacturers' mood is expected to deteriorate again over the coming three months while service-sector mood was seen rebounding further.
"A weak yen and price hikes are boosting import and other costs, dealing a blow to materials sectors among manufacturers, while the spectre of global slowdown weighed on the outlook," said Koya Miyamae, senior economist at SMBC Nikko Securities.
Pent-up demand and government support for the tourism industry led non-manufacturers, although future prospects for recovery depend much on any resurgence of COVID-19, he added.
Industries such as autos, steel and textiles weighed on overall manufacturers' sentiment, while communications, transport and utilities led non-manufacturers.
In a worrying sign of lacklustre rebound in consumption from the COVID-19 curbs, retailer sentiment slid further. Consumption accounts for more than half the economy.
In the Sept. 28-Oct. 7 poll of 495 big companies, out of which 254 replied, many firms, which responded on condition of anonymity, complained about higher costs of doing business due to cost-push inflation.
"The prices of products are not keeping pace with surging raw materials costs" as many subcontractors in the supply chain could not pass on input costs to their clients, one manager at a chemicals maker said.
"There are concerns about worsening profits due to import costs boosted by a weak yen on top of rising raw materials and energy costs," said a manager of a food-processing firm.
Some complained about the impact of geopolitical events.
"Our clients are cautious about raising capital investment due to U.S.-China frictions and the Ukraine crisis," wrote a machinery maker manager.
The BOJ's last survey on Oct. 3 showed big manufacturers' mood had worsened in July-September for a third straight quarter as high material costs dimmed recovery prospects for the fragile economy.
The Reuters Tankan index readings are derived by subtracting the percentage of respondents who say conditions are poor from those who say they are good. A positive reading means optimists outnumber pessimists.