Business confidence at 11-year high

TOKYO: Confidence among Japan’s biggest manufacturers is at an 11-year high, a key central bank survey showed yesterday, as the world’s No. 3 economy picks up pace.

The bullish survey underscored how Japan’s prospects have been improving on the back of strong exports, with investments linked to the Tokyo 2020 Olympics also giving the economy a shot in the arm.

The Bank of Japan’s Tankan report, a quarterly survey of more than 10,000 companies, showed a reading of 25 among major manufacturers in its December survey, the highest since its December 2006 poll.

The mood among major manufacturers has now risen for a fifth straight quarter.

The report, seen as the broadest indicator of Japan Inc’s health, marks the difference between the percentage of firms that are upbeat and those that see conditions as unfavourable.

Buoyed by a favourable outlook, the firms say they plan on average to boost capital spending by 10.2 per cent year-on-year, according to the survey.

“The strong reading reflects major manufacturers’ sound performance, thanks to brisk demand in the global economy,” said Tsuyoshi Ueno, economist at NLI Research Institute.

The report is a boost for Prime Minister Shinzo Abe, who has pledged to cement a lasting recovery in the once-booming economy with a growth plan dubbed Abenomics.

The scheme — a mix of aggressive monetary easing and huge government spending along with reforms to the economy — fattened corporate profits and sent the stock market higher. But it has failed in its goal of shrugging off the deflation that has plagued Japan for years.

Japan’s latest inflation rate of 0.8 per cent is still nowhere near the Bank of Japan’s two-per cent target.

However, the economy expanded by 0.6 per cent in the JulySeptember period, posting its longest string of gains in more than two decades.