Japan business sentiment for manufacturers improves in Q3-BOJ tankan * Big manufacturers sentiment index +13 vs fcast +10 * Big non-manufacturers index +13 vs fcast +17 * Big firms expect 8.6 pct rise in FY2014/15 capex Japanese business confidence among manufacturers improved for the first time in two quarters in the three months to September, a central bank survey showed, an encouraging sign that parts of the economy are stabilising. However, sentiment for the services sector worsened more than expected, suggesting some companies are still struggling to shake off the impact of a sales tax hike in April. The mixed data may do little to relieve pressure on policymakers to expand fiscal and monetary stimulus if the economy stumbles ahead of premier Shinzo Abes crucial decision by year-end on whether to proceed with a second sales tax hike in October 2015. The headline index for big manufacturers sentiment improved by 1 point from three months earlier to plus 13 in September, the BOJs closely-watched quarterly tankan survey showed on Wednesday. That compared with a median market forecast of plus 10. However, the mood among big service-sector firms worsened by 6 points to plus 13 in September, the survey showed, as the sales tax hike in April hit consumption. The median market forecast was for a reading of plus 17. Big manufacturers expect their business sentiment to remain the same three months ahead, while non-manufacturers firms expect sentiment to improve by 1 point, suggesting a slow and fragmented economic recovery. The tankans sentiment indexes are derived by subtracting the percentage of respondents who say conditions are poor from those who say they are good. A positive reading means optimists outnumber pessimists. The survey followed Tuesdays data showing annual household spending fell for a fifth straight month and factory output unexpectedly declined, dashing policymakers hopes the economy will recover fairly quickly from the tax-hike pain. BOJ policymakers will scrutinise the tankan, regarded as among the most comprehensive gauges of the economy given its big sample base, when they meet for a rate review next week. The central bank is set to keep monetary policy steady next week but may consider offering a bleaker view on some components of the economy such as factory output, some analysts say. Big firms expect to increase capital expenditure by 8.6 percent in the current fiscal year to March 2015, more than a median market forecast for a 7.2 percent increase, the BOJ tankan showed. The tankans capital expenditure plans have a strong positive correlation with capital spending in gross domestic product data and so serves as a good indicator of the strength of business investment. The BOJ has stood pat since deploying an intense burst of monetary stimulus in April last year, when it pledged to double base money via aggressive asset purchases to achieve its 2 percent inflation target in roughly two years. But after the tax hike drove the economy into its worst slump since the second quarter, a run of weak data has added to pressure for more easing steps from the central bank. BOJ Governor Haruhiko Kuroda has repeatedly said that Japan is on track to meet the price target, suggesting that no further stimulus was necessary for the time being. But he has also stressed that the BOJ will be ready to ease policy further if risks threaten achievement of the price goal. Government officials have also voiced readiness to offer additional fiscal stimulus through an extra budget for the current fiscal year ending in March 2015, if growth stalls. But analysts doubt whether the government can compile a stimulus package big enough to offer a significant boost to the economy, given constraints from Japans huge public debt.
Posted on: Wed, 01 Oct 2014 00:28:06 +0000
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