Disasters sour Japan's economic picture, but hope may lie ahead

By Brian Walker, CNN

File photo from atop Japan's Mount Fuji.

STORY HIGHLIGHTS

Quarterly Tankan survey shows big drop in business confidence index
However, the index is forecast to rise into positive territory in September
Unemployment ticks down slightly for the first time since March disaster, to 4.5%
Power-saving mandates on utilities and users are still in place

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Japan

(CNN) -- Japan's economy has been deeply shaken by a string of disasters, according to fresh numbers from the Bank of Japan released Friday, but there might be some early glimmers of hope.

The quarterly Tankan survey shows large manufacturers there have turned sharply pessimistic, but the world's third-biggest economy may be headed for a rebound by the end of the year.

The closely watched survey is the first one that fully reflects sentiment after the earthquake -- and it's worse than even most analysts feared.

The business confidence index for large manufacturers fell to minus 9 for large manufacturers, turning negative for the first time in the past five quarters.

The previous reading in March was plus 6, but the majority of responses then were sent in before the disasters, so the impact of the earthquake, tsunami and power problems was not clear in the previous quarter's report.

It was the first time respondents felt the Japanese economy was getting worse since March 2010, when companies, banks and governments around the world were still grappling with the fallout from the collapse of Lehman Brothers and other Wall Street giants.

But on the brighter side, big manufacturers expect conditions to get better: The index in September is forecast at plus 2. That's reflected in a 4.2% projected boost in capital spending over the next year, far higher than surveys had expected.

And in separate news, joblessness fell to just 4.5 percent, according to the latest government monthly figures, down 0.2 percentage points from May. It is the first improvement in Japan's jobless rate since the March 11 earthquake and tsunami struck.

The repercussions of that disaster continue to be felt, in the form of government-mandated power-saving measures that went in to effect at the same time as the Tankan was released.

Big industrial customers of Tokyo Electric Power Co. and Tohoku Electric Power Co. must cut peak-time electricity use by 15% or face daily fines of more than $10,000.

Sony Corp. and many other large firms have begun special summer hours by telling workers to come to offices and plants at least an hour early, while also letting them go home sooner.

In the offices, dress codes have been relaxed during the summer, allowing workers to cope with plans to turn up the thermostats to cut air-conditioning use as well.