By Daniel Leussink

TOKYO (Reuters) - Japanese manufacturers have become the least optimistic in more than a year about business conditions as firms struggled with rising import costs due to a weak yen and higher raw material prices, the Reuters Tankan poll for May showed.

The service-sector mood recovered to its most positive level since the start of the COVID-19 pandemic in early 2020 as the world's third-largest economy shook off more of the drag from the coronavirus, which has made consumers cautious about spending.

The monthly poll, which tracks the Bank of Japan's (BOJ) closely watched "tankan" quarterly survey, found confidence was likely to become less optimistic for both manufacturers and non-manufacturers over the coming three months.

"We're seeing a decrease in our workload as carmakers are facing impact on their output from chip shortages and Chinese coronavirus lockdowns that are causing parts supply delays," said a manager at a transportation equipment maker.

The poll of 499 big and mid-sized companies conducted from April 26 to May 13, of which 236 responded, showed firms faced headwinds from persistently high raw material costs and Chinese coronavirus lockdown measures.

The Reuters Tankan sentiment index for manufacturers fell to 5 in May from 11 a month earlier, its lowest since February last year. The service index rose to 13 from 8, hitting its highest since February 2020.

(For a detailed table of the results, click)

Some firms in the Reuters poll reported that the surging raw material costs were increasingly pressuring their profit margins.

"Soaring raw material prices could not sufficiently be passed on," said a manager at a metal products maker. Another manager, at a construction firm, said purchasing prices of goods had soared due to Russia's invasion of Ukraine.

Japan's wholesale rate of inflation in April grew 10% from the previous year as rising global commodity prices and a weak yen pushed up import costs, BOJ data showed on Monday, highlighting risks for the economic outlook.

In the Reuters poll, gains in the metal products/machinery and precision machinery/others sub-indexes helped offset sharp declines in those for autos/transport equipment and steel/nonferrous metals.

The mood among non-manufacturers improved mainly due to better sentiment in the information/communications and wholesalers sub-indexes.

"The impact of the coronavirus is declining," said a manager at a retailer.

The Reuters Tankan poll showed manufacturers' business confidence was seen falling to 3 in August, while that of service-sector firms was expected to fall slightly to 12.

The Reuters Tankan index readings are calculated 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.

(Reporting by Daniel Leussink; Editing by Jacqueline Wong)