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291416
Tue, 07/02/2013 - 02:57
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Japan Big Makers Show 1st Positive Sentiment in 7 Qtrs.: Tankan

Tokyo, July 1 (Jiji Press)--Business sentiment among large manufacturers in Japan turned positive for the first time in seven quarters, the Bank of Japan's "tankan" quarterly survey for June showed Monday. The closely watched diffusion index for large manufacturers' current business conditions stood at plus 4, against minus 8 in the previous March survey, logging the first positive figure since September 2011. The sentiment picked up for the second straight quarter. The pace of improvement was the largest since June 2010. The latest reading beat the median forecast of plus 2 among 16 economic research institutes polled by Jiji Press. The DI represents the percentage of companies seeing good business conditions minus those feeling the opposite. Large manufacturers' business outlook DI toward September stood at plus 10, the tankan report said. As expectations grew for Japanese Prime Minister Shinzo Abe's economic policy known as Abenomics, the BOJ's new monetary easing scheme introduced in April accelerated the yen's depreciation and pushed up stock prices. Business confidence improved mainly among exporting companies, such as automakers, electronics firms and steelmakers, on hopes that a weaker yen will boost their earnings. The DI improved to plus 16 from plus 10 for the auto industry, up for the second straight quarter, to minus 4 from minus 17 for electronics firms, and to minus 2 from minus 38 for steelmakers. For fiscal 2013, which started in April, large manufacturers assume a foreign exchange rate of 91.20 yen to the dollar, up about 6 yen from the previous survey and the first rise above 90 yen since June 2010. The June tankan figures are "quite good," Kenji Tanaka, head of the Development Bank of Japan's economic research department said. In the previous March survey, the DI for large manufacturers showed its first improvement in three quarters, but the turnaround resulted from mere expectations of economic recovery amid a weaker yen and rising stocks, he said. "The latest readings reflect improvement in the real economy," he said. The June report said the current business conditions DI came to plus 12 for large nonmanufacturers, up from plus 6 and improving for the second straight quarter. The index stood at plus 25, up from plus 16, among real estate firms which enjoy a last-minute surge in demand for homes ahead of a planned consumption tax hike next April. Construction firms' DI improved from plus 5 to plus 14 as the government's economic stimulus measures are having a positive impact. The outlook DI toward September remained unchanged at plus 12 for large nonmanufacturers. The tankan report said capital spending planned by large manufacturers for fiscal 2013 is up 6.7 pct from the previous year and that by large nonmanufacturers is up 4.9 pct. Overall capital spending planned by large companies is up 5.5 pct, better than a 2.0 pct decline in the previous report. Commenting on the stronger sentiment shown in the tankan report, Chief Cabinet Secretary Yoshihide Suga said at a news conference that the effect of Abenomics is beginning to be felt. The policy is drawing "big expectations," he said. "The government will make every effort to get the economy out of deflation as soon as possible and realize a private sector-driven sustainable economy." END

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