Japanese confidence rises after 18 months

tokyo — A closely-watched central bank survey showed big Japanese manufacturers’ sentiment improved for the first time in six quarters to hit a one-year high, as falls in the yen and a pick-up in overseas growth brightened Japan’s economic prospects.

The Bank of Japan tankan survey published on Wednesday found companies also maintained their upbeat spending plans, reinforcing market expectations that the central bank will hold off on expanding monetary stimulus in the coming months.

Service-sector confidence, however, was unchanged from three months ago as bad weather hurt private consumption, the survey showed, underscoring the fragile and patchy nature of recovery in the world’s third-largest economy. The headline index measuring big manufacturers’ business sentiment rose to plus10 from plus-6 three months ago, the tankan survey showed, matching a median market forecast and hitting the highest level since December 2015.

“Manufacturing sentiment is doing well, reflecting a recovery in global trade,” said Hidenobu Tokuda, senior economist a Mizuho Research Institute. “I think the economy will continue to grow due to exports and public works spending. The chance of additional monetary easing has receded.” The BoJ is likely to keep monetary policy steady and give a more upbeat view of the economy at next week’s rate review. —