Weak Japan confidence reveals recovery doubts
Doubts about a rebound in Japan’s economy are rippling through boardrooms across the country, a key central bank survey suggested Wednesday, as efforts to revive growth falter.
The Bank of Japan’s closely watched Tankan report showed confidence among big manufacturers stood at plus 12 in March, flat from the previous survey and missing expectations that the level would come in at 14.
While sentiment among nonmanufacturers was more upbeat, they pared profit expectations while Japan’s increasingly pessimistic corporate titans trim their spending plans.
than 10,000 companies — which shows the difference between the percentage of firms that are optimistic and those that see conditions as unfavorable — is the most comprehensive indicator of how Japan Inc. is faring.
Tokyo’s benchmark Nikkei 225 index fell 0.89 percent morning trade as investors reacted to the downbeat report.
The tepid survey comes days after separate data showed output from Japanese factories shrank by a worse-than-expected 3.4 percent in February, while inflation stalled as a key measure of prices was flat for the first time in nearly two years.
The gloomy data highlight the challenges facing Prime Minister Shinzo Abe’s two-year-old bid to conquer deflation and revive the long-sluggish economy, dubbed Abenomics — and they stand in stark contrast to Tokyo’s relatively rosy assessment of Japan’s prospects.
‘Moment of truth’
While a weak yen has lifted profits among Japanese exporters, it also jacks up companies’ import costs and analysts have warned that the benefits of a cheap currency were fading as firms get set to report their quarterly results later this month.
“A stall in forex rates and a bottoming out of oil prices would slam the brakes on firms’ profit momentum,” the SMBC Nikko report said.
“Abenomics could face its moment of truth in the second half of this year.”
Lufthansa CEO Carsten Spohr, left, and Germanwings CEO Thomas Winkelmann lay a wreath near a stele in memory of the victims of the Germanwings Airbus A320 crash, in the small village of Le Vernet, French Alps, on Wednesday, April 1. French President Francois Hollande said on Tuesday that it would soon be possible to identify the victims of the Germanwings plane disaster, as insurers said hundreds of millions of U.S. dollars were being set aside to cover compensation for their families.