World Economy

Japan Business More Confident

Japan Business More Confident
Japan Business More Confident

Business confidence among Japan’s large manufacturers improved to a 10-year high in the July-September quarter as the economy enjoys its best run in more than a decade helped by a recovery in consumer spending, a central bank survey showed Monday.

The better-than-expected result shows that companies are feeling more confident about the state of the economy less than three weeks from an early election in which Prime Minister Shinzo Abe will likely highlight Japan’s improved growth performance, MarketWatch reported.

The main index measuring large manufacturers’ sentiment rose to plus 22 in the three month period from plus 17 previously, according to the Bank of Japan’s quarterly tankan survey. The tankan reading for large manufacturers was the highest since September 2007.

The reading compares with a forecast of plus 18 by economists polled by The Wall Street Journal. The index represents the percentage of companies saying business conditions are favorable minus those saying conditions are unfavorable.

The survey showed that big manufacturers were also much more optimistic about likely profit performance in the current business year, although large companies in general were slightly less bullish about capital investment.

The result comes after gross domestic product data showing that Japan’s economy has expanded for six straight quarters, its longest stretch of growth since 2006.

The reading will also likely make the BoJ feel more comfortable about sticking with its current easing framework to hit its 2% inflation target. BoJ Governor Haruhiko Kuroda has said the easing effects of the bank’s current policy to hold down a range of interest rates will become stronger as the economy improves.

The tankan index for large non-manufacturers came to plus 23 in the September survey unchanged from the previous quarter. The reading matched a forecast by economists.

The survey showed that big manufacturers see profits rising 4.7% in the year ending March 2018, compared with a drop of 3.3% forecast for the year in the previous survey. Large companies plan to increase their capital investment in the current financial year ending March 2018 by 7.7%, a fraction lower than an 8.0% increase projected in the previous survey.

Large manufacturers expect the dollar will trade at an average 109.29 yen this financial year. The dollar was changing hands at Y112.63 in early Asian hours Monday.

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