The business sentiment index (BSI) for large enterprises in Japan fell to minus 1.9 for the April-June quarter, marking the first negative figure in five quarters as U.S. tariff policies weighed heavily on exporters, official data showed Thursday.

The decline was driven primarily by the manufacturing sector, which recorded a BSI of minus 4.8, according to data released by Japan's Cabinet Office and Ministry of Finance.

Industries subject to U.S. tariffs saw the most obvious deterioration, with the steel industry index falling to minus 29.1 and the automobile and auto parts sector at minus 16.1 due to weakened domestic and international demand.

Non-manufacturing industries also turned negative for the first time in 11 quarters, posting a BSI of minus 0.5. Rising procurement costs in wholesale trade and declining advertising revenue in the broadcasting sector within information and communications contributed to the downturn.

Looking ahead, large companies expect the BSI to recover to plus 5.2 for July-September and plus 6.1 for October-December, driven in part by anticipated growth in semiconductor-related orders.

However, the auto and auto parts sector, heavily affected by U.S. tariffs, is projected to remain nearly flat in both upcoming quarters.

A Ministry of Finance official stated that the government will closely monitor corporate trends, citing downside risks to the economy stemming from U.S. trade policies and inflation.