Confidence among big manufacturers on the rise
TOKYO: Big manufacturers have more confidence in Japan’s business conditions than they have had for a decade as a weak yen and robust global demand add momentum to the economic recovery, a closely watched central bank survey showed yesterday.
In a sign the recovery was broadening, small manufacturers’ business confidence also hit a decade-high and the ratio of companies complaining of labour shortages was at a 25-year high, according to the Bank of Japan’s “tankan” quarterly survey.
The upbeat data could help Prime Minister Shinzo Abe as he tries to convince voters in an October 22 election that his “Abenomics” stimulus policies have improved their livelihoods.
It also supported Bank of Japan (BoJ) policymakers’ hopes that a sustained economic recovery would boost wages and household spending, though many analysts expected inflation to remain distant from the central bank’s two per cent target.
“Big manufacturers’ sentiment was probably driven by a weaker yen and hefty corporate profits,” said Yuichiro Nagai, economist at Barclays Securities Japan.
“The tankan results were in line with or even stronger than the BoJ’s scenario. But the price trend remains weak,” he said, adding that he expected BoJ to cut its inflation forecasts again at a rate review this month.
The headline index for big manufacturers’ sentiment stood at plus 22 last month, handily exceeding a median market forecast of plus 18 to mark the highest level since September 2007.
It was higher than plus 17 seen in the survey in June, posting a fourth straight quarter of improvement. The big non-manufacturers’ sentiment index stood at plus 23, unchanged from June and matching a median market forecast.
Both big manufacturers and non-manufacturers expected business conditions to deteriorate in the next three months, the survey found, reflecting their concerns about uncertain outlook. But big firms expected to increase capital expenditure by 7.7 per cent in the current fiscal year ending in March next year, roughly unchanged from their plans in June. Reuters