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Japan's big businesses see sentiment improve in latest BOJ Tankan survey

Xinhua, July 1, 2015 Adjust font size:

Sentiment at big manufacturers improved in June from three months earlier, strengthening for the first time in three quarters, the Bank of Japan's Tankan survey showed Wednesday, with signs pointing to continued improvements in the future.

The diffusion index for large manufacturers, including automakers and the country's electronic producing behemoths, rose to a reading of 15 in the recording period, climbing three points from a previous reading of 12, with the latest reading coming in ahead of median analysts' expectations.

Business sentiment among large manufacturers, therefore, according to the survey, was at its highest level since March 2014, when consumption spiked prior to a hime in the tax levy in April from 5 to 8 percent.

Sentiment in the service-sector also improved, rising four points to plus 23 from plus 19, as shops, hotels and restaurants all benefited from an increase in tourism and domestic consumer spending, although the reading came in slightly below forecasts for plus 25.

The BOJ's survey also revealed that big firms plan to raise their capital expenditure by an average of 9.3 percent in the fiscal year from April through next March, rising from a 1.2 percent slip in the March survey and coming in ahead of a 5.2 percent increase expected by analysts.

"Machinery makers saw sentiment improve, reflecting firm demand for capital expenditure," a representative from the central bank told a press briefing after the survey was released.

Economists are of the opinion that the figures reflect a steady growth in Japan's economy despite recent figures showing sluggish factory production, which could impact second quarter economic data.

It is unlikely therefore the central bank will adjust its interest rate policy in the immediate future and as it continues to chase its 2 percent inflation goal, will be bolstered by the fact that both businesses and consumers are starting to spend again.

The BOJ's quarterly Tanken survey is regarded by economists as Japan's most closely watched gauge of business sentiment and the current diffusion indexes reveals the percentage of companies reporting favorable business conditions outweigh those reporting unfavorable environments. Endi