MNI BRIEF: Spill-Over of Weak Services To Consumer A BOJ Worry

Bank of Japan officials are becoming increasing concerned that the continued weakness in the face-to-face service sector will spill over into demand for goods and clothes through Q2 as department stores in big cities remain closed, MNI understands.

There is also a worry that the manufacturing sector could continue to struggle with output if Q2's expected recovery in semi-conductor supply fails to materialise, as that will add further downward pressure on both production and exports. Bank officials still see GDP contracting in Q2, albeit with a less steep decline than seen in Q1 (estimated -5.0% annualised).