ID :
144305
Thu, 09/30/2010 - 11:29
Auther :
Shortlink :
https://www.oananews.org//node/144305
The shortlink copeid
Business sentiment improves in BOJ survey, but firms wary of outlook+
TOKYO, Sept. 29 Kyodo - Business sentiment among big manufacturers in Japan improved for the sixth straight quarter in the three months through September on the back of solid exports, but companies are cautious about prospects amid the waning effects of
government incentives and the yen's rise, the Bank of Japan's Tankan survey showed Wednesday.
While the key index of sentiment rose 7 points to plus 8 from the previous
quarter, sources close to the matter said the BOJ tilted toward taking
additional monetary easing steps as the index for December is seen sharply
dropping to minus 1.
The central bank is expected to discuss steps they could take at its two-day
policy meeting from Monday, possibly including a further expansion of its
low-interest rate lending facility.
The survey also showed that sentiment among nonmanufacturing enterprises also
picked up for the sixth straight quarter, with the index gaining 7 points to
plus 2. But they expect sentiment to worsen in the next three months, with the
index standing at minus 2.
''The outlook for major makers' sentiment is worse than expected. While the
fading effect of a subsidy program for purchases of ecologically friendly cars
is one factor, the slowdown in the global economy and the yen's rise are also
affecting the sentiment,'' Yusuke Ichikawa, an economist at the Mizuho Research
Institute, said.
It is the first time since December 2008 -- three months after the collapse of
Lehman Brothers Holdings Inc. -- that major manufacturers have foreseen a
downturn in their sentiment three months ahead.
The prospects for export industries were especially dismal, with the sentiment
of automakers tumbling to minus 6 in the December outlook to mark the sharpest
ever fall after jumping to plus 32 in the period to September thanks to
last-minute buying ahead of the end of the subsidy earlier this month.
The yen's appreciation against the U.S. dollar added to concerns, as it erodes
the value of earnings when repatriated. In the survey, big manufacturers
anticipate the dollar will average 89.66 yen in fiscal 2010, compared with the
mid-83 yen level late Wednesday in Tokyo.
The diffusion index represents the percentage of companies reporting favorable
business conditions minus that of firms describing unfavorable environments.
The September indexes for major manufacturers and nonmanufacturers compare with
the average market forecasts of plus 6 and minus 2, respectively, in a Kyodo
News survey.
Besides solid exports to emerging countries and last-minute demand for
eco-cars, the heat wave that swept through the country this summer is believed
to have contributed to the better-than-expected improvement of sentiment of
large manufacturers.
By industry, textile makers and electrical machinery companies saw the index
improve by 9 points and 8 points, respectively.
According to the latest Tankan, big companies in both the manufacturing and
nonmanufacturing sectors now plan to increase their capital investments by 2.4
percent in fiscal 2010 from the previous year, a downward revision from the
June survey. The data was compiled under a new accounting standard.
As for earnings prospects, large manufacturers expect their pretax profits in
fiscal 2010 to grow 54.3 percent from a year earlier and major nonmanufacturers
are expecting an increase of 13.3 percent.
Meanwhile, both small manufacturers' and nonmanufacturers' indexes improved
from the previous quarter to minus 14 and minus 21, respectively.
The quarterly Tankan survey is one of the key factors that would affect the
BOJ's decision on whether to take additional monetary easing steps, which the
central bank has started to consider as it is becoming more cautious about the
risks to the economy.
The BOJ will make a final decision on the issue by also taking into account the
conditions of the U.S. economy and the moves in the foreign exchange market.
Even if the BOJ does not decide on monetary easing at the policy meeting next
week, there is a high possibility that the central bank would decide on such
steps at a meeting on Oct. 28, which is set to be convened to compile a
semiannual report on the outlook for economic activity and prices.
Ichikawa said the survey, which showed outlook sentiment ''increasingly
worsening,'' has put more pressure on the BOJ to loosen its monetary policy.
''The yen-selling intervention (conducted by Japanese authorities earlier this
month) has not reversed the yen's rising trend...If the situation is left as it
is, there is a possibility that the yen would rise further, and further chill
corporate sentiment,'' he said.
The BOJ surveyed 11,283 companies between Aug. 23 and Sept. 28, of which 98.9
percent responded.
==Kyodo
government incentives and the yen's rise, the Bank of Japan's Tankan survey showed Wednesday.
While the key index of sentiment rose 7 points to plus 8 from the previous
quarter, sources close to the matter said the BOJ tilted toward taking
additional monetary easing steps as the index for December is seen sharply
dropping to minus 1.
The central bank is expected to discuss steps they could take at its two-day
policy meeting from Monday, possibly including a further expansion of its
low-interest rate lending facility.
The survey also showed that sentiment among nonmanufacturing enterprises also
picked up for the sixth straight quarter, with the index gaining 7 points to
plus 2. But they expect sentiment to worsen in the next three months, with the
index standing at minus 2.
''The outlook for major makers' sentiment is worse than expected. While the
fading effect of a subsidy program for purchases of ecologically friendly cars
is one factor, the slowdown in the global economy and the yen's rise are also
affecting the sentiment,'' Yusuke Ichikawa, an economist at the Mizuho Research
Institute, said.
It is the first time since December 2008 -- three months after the collapse of
Lehman Brothers Holdings Inc. -- that major manufacturers have foreseen a
downturn in their sentiment three months ahead.
The prospects for export industries were especially dismal, with the sentiment
of automakers tumbling to minus 6 in the December outlook to mark the sharpest
ever fall after jumping to plus 32 in the period to September thanks to
last-minute buying ahead of the end of the subsidy earlier this month.
The yen's appreciation against the U.S. dollar added to concerns, as it erodes
the value of earnings when repatriated. In the survey, big manufacturers
anticipate the dollar will average 89.66 yen in fiscal 2010, compared with the
mid-83 yen level late Wednesday in Tokyo.
The diffusion index represents the percentage of companies reporting favorable
business conditions minus that of firms describing unfavorable environments.
The September indexes for major manufacturers and nonmanufacturers compare with
the average market forecasts of plus 6 and minus 2, respectively, in a Kyodo
News survey.
Besides solid exports to emerging countries and last-minute demand for
eco-cars, the heat wave that swept through the country this summer is believed
to have contributed to the better-than-expected improvement of sentiment of
large manufacturers.
By industry, textile makers and electrical machinery companies saw the index
improve by 9 points and 8 points, respectively.
According to the latest Tankan, big companies in both the manufacturing and
nonmanufacturing sectors now plan to increase their capital investments by 2.4
percent in fiscal 2010 from the previous year, a downward revision from the
June survey. The data was compiled under a new accounting standard.
As for earnings prospects, large manufacturers expect their pretax profits in
fiscal 2010 to grow 54.3 percent from a year earlier and major nonmanufacturers
are expecting an increase of 13.3 percent.
Meanwhile, both small manufacturers' and nonmanufacturers' indexes improved
from the previous quarter to minus 14 and minus 21, respectively.
The quarterly Tankan survey is one of the key factors that would affect the
BOJ's decision on whether to take additional monetary easing steps, which the
central bank has started to consider as it is becoming more cautious about the
risks to the economy.
The BOJ will make a final decision on the issue by also taking into account the
conditions of the U.S. economy and the moves in the foreign exchange market.
Even if the BOJ does not decide on monetary easing at the policy meeting next
week, there is a high possibility that the central bank would decide on such
steps at a meeting on Oct. 28, which is set to be convened to compile a
semiannual report on the outlook for economic activity and prices.
Ichikawa said the survey, which showed outlook sentiment ''increasingly
worsening,'' has put more pressure on the BOJ to loosen its monetary policy.
''The yen-selling intervention (conducted by Japanese authorities earlier this
month) has not reversed the yen's rising trend...If the situation is left as it
is, there is a possibility that the yen would rise further, and further chill
corporate sentiment,'' he said.
The BOJ surveyed 11,283 companies between Aug. 23 and Sept. 28, of which 98.9
percent responded.
==Kyodo
