TOKYO: Japan’s biggest manufacturers were in a cautious mood during the last quarter of the year, a central bank survey showed on Monday, despite a modest pick-up in the world’s number three economy.
The Bank of Japan’s (BoJ) closely watched Tankan report showed confidence among major manufacturers was flat at plus 12 in December from the previous quarter.
The survey of more than 10,000 companies nationwide is the most comprehensive indicator of how Japan Inc. is faring, and marks the difference between the percentage of firms that are upbeat and those that see conditions as unfavorable.
The latest result was slightly better than market expectations, and likely to temper hopes that Japanese policymakers will expand their stimulus program.
The BoJ holds its last meeting of 2015 this week.
“The upside surprise in today’s Tankan survey will support the Bank of Japan’s upbeat view on the economy and suggests that policymakers will leave the pace of asset purchases unchanged at least until January,” research firm Capital Economics said in a commentary.
The latest report comes after the BoJ’s previous survey showed sentiment fell from its highest level in more than a year, as a slowdown in China and weakness at home dented firms’ confidence.
Sentiment among non-manufacturers was also unchanged in the latest BoJ report, along with confidence at medium-size and small manufacturers.
December’s Tankan set a “weak tone” for the mood among Japan’s firms, while company forecasts were also lackluster, said Junichi Makino, chief economist at SMBC Nikko Securities.
“In the immediate term, exports and production have bottomed out,” Makino added.
“Among non-manufacturers . . . [sentiment]remains weak, despite improvement in commercial conditions.”
Last month, official economic growth figures showed another contraction in the
July-September period, suggesting Japan had fallen into its second recession in as many years.
But later revised figures actually showed modest 0.3-percent growth in the quarter, as capital spending and factory output picked up.
The initial data threatened to deal an another blow to Prime Minister Shinzo Abe, who has
staked his reputation on kick-starting the economy with a policy blitz of fiscal spending, aggressive monetary policy easing and structural reforms—dubbed Abenomics.
Japan’s economy fell into a brief recession in 2014 after consumers tightened their belts as Tokyo hiked the country’s consumption tax to help pay down a massive national debt.
That downturn spurred the central bank to sharply increase its already massive bond-buying program—a cornerstone of Abenomics—effectively printing money to spur lending.
But the moves, and Abe’s lurch to overhaul Japan’s highly regulated economy, have been slow going as the conservative premier marks his third year in office this month.
Japan, once boasting Asia’s biggest economy with internationally known brands, has been overtaken by rival China, as years of deflation weighed on growth.