Confidence rising in Japan
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Sentiment at big Japanese companies has improved in recent months.
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TOKYO, Japan -- Corporate Japan regained confidence in the October-December quarter amid robust exports and profits, a government survey shows.
That is adding to hopes of a sustained recovery in the world's second-largest economy.
But a separate survey showed capital spending rose only 0.4 percent in July-September, raising speculation that growth data for the quarter may have to be revised down.
The business sentiment survey was released Thursday by the Ministry of Finance.
Barclays Capital economist Mamoru Yamazaki said in a research note that the results suggested there will also be "broad improvements" in the Bank of Japan's closely watched Tankan survey, which is due out next week.
He said companies were optimistic about the future, with their confidence attributed to the economic expansion and better corporate profits.
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| ASIA's TOP 10 ECONOMIES |
2001 GDP in $US billions
1. Japan 4,141
2. China 1,159
3. India 477
4. South Korea 422
5. Australia 369
6. Taiwan 297
7. Hong Kong 162
8. Indonesia 145
9. Thailand 115
10. Malaysia 88
Sources: World Bank,
Taiwan government |
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Last month Japan posted another surprisingly good quarter of economic growth, pushing its annualized rate to 2.2 percent.
The Cabinet Office reported on November 14 growth was up 0.6 percent in the September quarter from the previous quarter -- the seventh straight quarterly gain for an economy that has struggled for much of the past 10 years.
Thursday's business sentiment survey showed sentiment at large Japanese firms improved in October-December from the previous quarter to plus 5.6, compared with minus 5.2 in July-September.
The index subtracts the percentage of firms that expect the business environment to worsen from the percentage that expect it to improve. A positive reading means optimists outnumber pessimists.
"The sentiment index shows that businesses are finally beginning to feel confident in the economic recovery," Yoshimasa Maruyama, an economist at Mizuho Research Institute, said Thursday.
"The capex figures show that third-quarter GDP may have been a bit exaggerated. But it's still positive, and looking forward we see capital spending increasing again in 2004."
The sentiment index stayed in negative territory for smaller businesses, which are having a harder time recovering from the nation's worst economic downturn in decades.
The smaller firms' index was minus 20, a slight recovery from minus 28.2 in in July-September.
Economists said they were unsure the improvement in sentiment could last if the yen rose any higher.
A higher yen is seen damaging to exporters as it dents the value of their overseas profits when repatriated, and many say current levels already look threatening.
They say a further rise in the currency, along with a fall in the stock market's benchmark Nikkei 225 average, could determine if Japan's nascent recovery can continue.
Others believe the economy may already be losing momentum, judging from the capital spending figures.
Japanese companies increased spending on plant and equipment by 0.4 percent in the July-September quarter from the same period a year earlier.
It had risen 6.4 percent in April-June.
"The slowdown in electronics and machinery is worrying. Non-manufacturing we know is weak, so it is key that sectors like electronics make up the slack," said Seiji Adachi, an economist at Credit Suisse First Boston.
He also said GDP for the July-September third quarter would likely be revised down.
The Organisation for Economic Cooperation and Development (OECD) has forecast that Japan's GDP will grow 1.8 percent in both calendar 2004 and 2005, after expanding 2.7 percent in 2003.
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