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172536
Fri, 04/01/2011 - 18:20
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https://oananews.org//node/172536
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Tankan shows business sentiment up but outlook dim amid quake impact
TOKYO (Kyodo) - Business confidence among major Japanese firms improved slightly in March from three months earlier, the Bank of Japan said Friday, while signaling a possible deterioration in sentiment amid the negative impact on the economy from the devastating earthquake and tsunami of March 11.
The diffusion index in the central bank's Tankan survey showed major manufacturers improved their sentiment to plus 6 from December's plus 5 for the first increase in two quarters. Economists had forecast a fall to plus 4 in a Kyodo News survey.
As for big nonmanufacturers, the index, which represents the percentage of companies reporting favorable business conditions, minus the percentage reporting an unfavorable environment, rose from plus 1 to plus 3, also the first gain in two quarters. This was against the average projection of a decline to zero.
The BOJ collected responses from 11,101 firms, including smaller ones. But some 72 percent responded before the natural disaster.
The bank said it will separately release data Monday that specifies the impact of the quake on the latest Tankan, in an extraordinary move. This could become the first information provided by Japanese authorities that shed light on a considerable postquake deterioration in corporate minds.
On prospects, business sentiment could get worse as the quarterly survey pointed to possible declines in the indexes in June by 4 points each, to plus 2 for manufacturers and minus 1 for nonmanufacturers, affected by the recent sharp rise of crude oil prices amid civil unrest in the Middle East and North Africa.
Analysts say they have to wait for more economic readings before judging the magnitude of the blow dealt to the economy by the disaster in Japan.
The March Tankan is expected to have ''only small effects on financial markets and the monetary policy (of the BOJ)...as it factored in less than 30 percent'' of the damage caused by the disaster, Takahide Kiuchi, senior economist at Nomura Securities Co., said in his report.
Even with the separate data the bank is to release, Kiuchi said, ''what could be learned from companies affected by the earthquake was limited,'' meaning it would be necessary to wait until the releases of more data, such as the March industrial output due out April 28, in order to precisely grasp the situation.
The prequake data added to the view that the Japanese economy had been recovering from a temporary halt, helped by recovering exports and production.
By sector, automakers marked an improvement in their sentiment in a sign that industrial output had hit bottom, while steelmakers showed deterioration on rising energy and raw material costs.
The earthquake and tsunami, which destroyed housing and infrastructure, crippled manufacturing and some power supply and unleashed an unprecedented nuclear crisis, have cast shadows over the outlook, with economists downgrading their forecasts for Japanese economic growth.
Tankan also showed big companies in all industries plan to cut their capital spending by an average 0.4 percent in fiscal 2011, which starts Friday, from the previous year, a development in contrast to recently improved earnings at major firms.
While large manufacturers expect to boost their business investments by 4.3 percent, nonmanufacturers eye trimming 2.9 percent.
Big companies forecast their sales would rise 1.4 percent in the reporting fiscal year with pretax profit gaining 0.1 percent, although those figures will likely be downgraded later in the year due to the quake.
Among small- and medium-sized enterprises, the confidence index rose 2 points to minus 10 for manufacturers and gained 3 points to minus 19 for nonmanufacturers. But the outlook is cloudier, with the readings expected to fall to minus 16 and minus 27, respectively.
The diffusion index in the central bank's Tankan survey showed major manufacturers improved their sentiment to plus 6 from December's plus 5 for the first increase in two quarters. Economists had forecast a fall to plus 4 in a Kyodo News survey.
As for big nonmanufacturers, the index, which represents the percentage of companies reporting favorable business conditions, minus the percentage reporting an unfavorable environment, rose from plus 1 to plus 3, also the first gain in two quarters. This was against the average projection of a decline to zero.
The BOJ collected responses from 11,101 firms, including smaller ones. But some 72 percent responded before the natural disaster.
The bank said it will separately release data Monday that specifies the impact of the quake on the latest Tankan, in an extraordinary move. This could become the first information provided by Japanese authorities that shed light on a considerable postquake deterioration in corporate minds.
On prospects, business sentiment could get worse as the quarterly survey pointed to possible declines in the indexes in June by 4 points each, to plus 2 for manufacturers and minus 1 for nonmanufacturers, affected by the recent sharp rise of crude oil prices amid civil unrest in the Middle East and North Africa.
Analysts say they have to wait for more economic readings before judging the magnitude of the blow dealt to the economy by the disaster in Japan.
The March Tankan is expected to have ''only small effects on financial markets and the monetary policy (of the BOJ)...as it factored in less than 30 percent'' of the damage caused by the disaster, Takahide Kiuchi, senior economist at Nomura Securities Co., said in his report.
Even with the separate data the bank is to release, Kiuchi said, ''what could be learned from companies affected by the earthquake was limited,'' meaning it would be necessary to wait until the releases of more data, such as the March industrial output due out April 28, in order to precisely grasp the situation.
The prequake data added to the view that the Japanese economy had been recovering from a temporary halt, helped by recovering exports and production.
By sector, automakers marked an improvement in their sentiment in a sign that industrial output had hit bottom, while steelmakers showed deterioration on rising energy and raw material costs.
The earthquake and tsunami, which destroyed housing and infrastructure, crippled manufacturing and some power supply and unleashed an unprecedented nuclear crisis, have cast shadows over the outlook, with economists downgrading their forecasts for Japanese economic growth.
Tankan also showed big companies in all industries plan to cut their capital spending by an average 0.4 percent in fiscal 2011, which starts Friday, from the previous year, a development in contrast to recently improved earnings at major firms.
While large manufacturers expect to boost their business investments by 4.3 percent, nonmanufacturers eye trimming 2.9 percent.
Big companies forecast their sales would rise 1.4 percent in the reporting fiscal year with pretax profit gaining 0.1 percent, although those figures will likely be downgraded later in the year due to the quake.
Among small- and medium-sized enterprises, the confidence index rose 2 points to minus 10 for manufacturers and gained 3 points to minus 19 for nonmanufacturers. But the outlook is cloudier, with the readings expected to fall to minus 16 and minus 27, respectively.
