TOKYO — Major Japanese manufacturers — riding high from a booming Asia — haven’t felt this good in two years.
A key central bank report released Thursday showed business confidence among Japan’s biggest manufacturers improved for a fifth straight quarter, thanks to Asia’s rapid rebound from the global recession, which has bolstered demand for the country’s exports of consumer gadgets, cars and other goods.
The Bank of Japan’s quarterly “tankan” survey of business sentiment showed the main index for large manufacturers stood at 1. Three months ago it hit minus 14.
The figure represents the percentage of companies saying business conditions are good minus those saying conditions are unfavourable. The higher the number, the better the mood.
The result beat Kyodo news agency’s average market forecast of minus 3 and was the first reading in positive territory since June 2008.
The improvement in confidence suggests the recent turmoil in financial markets has not affected the real economy much, said Masamichi Adachi, senior economist at JPMorgan Securities Japan. It has “reassured our view that recovery remains intact,” Adachi said in a commentary.
The tankan helps the central bank guide monetary policy and is a closely watched barometer of the country’s economic health. The latest results lend support to the Bank of Japan’s assessment that the world’s second-biggest economy is enjoying a moderate recovery.
Last month, Gov. Masaaki Shirakawa credited the rest of the world, particularly emerging economies, for fueling exports, production and business investment in Japan.
Big companies surveyed by the tankan indicated they planned to increase capital investments by 4.4 per cent this fiscal year through March 2011. The forecast is a significant reversal from last year’s 17 per cent decline.
Japan’s most well-known brands have announced fatter capital spending plans for this fiscal year. Toshiba Corp. is looking to spend $14 billion over the next three years to amplify its strengths in semiconductors and nuclear power. Honda Motor Co. expects a 50 per cent jump in capital investments in the year through March 2011 after slashing such spending by 45 per cent last year.
The good news, however, was tempered by other details that reflect emerging worries about Europe’s debt problems and ongoing caution about the sluggish domestic economy. Companies forecast marginal improvements in sentiment in coming quarters and employers report that they still have too many workers. Businesses of all sizes expect to slash hiring of new graduates by 24 per cent this year, the tankan showed.