Japan's business confidence improves despite tax hike

GMT 16:32 2014 Wednesday ,01 October

Arab Today, arab today Japan's business confidence improves despite tax hike

the Bank of Japan (BOJ)
Tokyo - KUNA

Business confidence among major Japanese manufacturers in the July-September period improved from the previous three months, despite the impact of the April sales tax hike, the Bank of Japan (BOJ) said Wednesday.
The central bank's quarterly survey showed the business sentiment index among big makers in the world's third-largest economy rose to plus 13, compared with plus 12 in the June poll, marking the first improvement in two quarters.
The index represents the percentage of companies which are positive about their business minus the percentage of those who gave negative replies. Thus, a positive number means optimists outnumber pessimists.
The central bank's "tankan," which means short-term economic outlook, is Japan's most closely watched index of business confidence. But confidence among large retailers, banks, real estate companies and other non-manufacturers lost 6 points to plus 13 for the second straight quarterly deterioration, due to weak private consumption following the sales tax increase in April, from 5 percent to 8 percent.
The survey also showed that big firms in both manufacturing and non-manufacturing sectors plan to boost capital spending by 8.6 percent in fiscal 2014 through March 31 from the previous year, up from the 7.4 percent gain in the June survey. Looking ahead, large manufacturers expect their sentiment index to remain unchanged at plus 13 in the next survey in December, while large non-manufacturers predict the index will rise to plus 14. According to the survey, big manufacturers anticipated that the US dollar will average JPY 100.73 in the current business year, compared with their previous projection in the June survey of JPY 100.18.
The weak yen benefits exporters, such as automakers and industrial machinery makers, as it boosts export profitability by making Japanese products cheaper overseas. The latest survey was conducted between Aug. 27 and Sept. 30, covering 10,369 companies, of which 99.3 percent responded. Prime Minister Shinzo Abe plans to decide by December whether to further raise the consumption tax to 10 percent in October 2015 by taking into account economic data for the July-September period, including BOJ's tankan and the third-quarter GDP, which will be released next month.

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