Daily News Online

DateLine Thursday, 2 October 2008

News Bar

News: Aid workers complete pull-out ...        Political: JHU calls for commission to probe INGO activities ...       Business: Business confidence rises to new high - LMD ...        Sports: Lankans play India, HK in Group C ...






Marriage Proposals
Government Gazette

Japanese business confidence at five-year low: Survey

Business confidence among major Japanese manufacturers fell into negative territory for the first time in five years as an economic slump intensifies, a key central bank survey showed Wednesday.

The malaise in Japanese boardrooms deepened for a fourth straight quarter as Asia's largest economy shows signs of sinking into recession.

Confidence among big manufacturers tumbled to minus three in September from a figure of plus five the previous quarter, hitting the lowest level since June 2003, according to the Bank of Japan's Tankan survey of more than 10,000 firms.

The index measures the percentage of firms that think business conditions are good minus those that think they are bad. The result was worse than market forecasts for a figure of minus one. "Japanese companies will continue to be pressured, probably at least until towards the middle of 2009," said Kyohei Morita, chief economist for Japan at Barclays Capital.

"As long as the overseas economies, mainly the US and Europe, stay in the doldrums, the Japanese economy will not be able to get out of its stagnation."

Fears of a recession in Japan have grown since the economy contracted in the second quarter of the year, while fresh turmoil has erupted on global financial markets due to a banking sector crisis.

Corporate Japan "is obviously going to be heading into a fairly difficult phase," said Richard Jerram, chief economist for Japan at Macquarie Securities.

One glimmer of good news was the recent drop in oil prices.

"Clearly there's bad news in terms of cyclical demand to come over the next six months but I think it's important to remember it will be offset to some degree by the lower costs," he said.

Big manufacturers predicted a further deterioration in the sentiment index to a figure of minus five in December.

Confidence is down sharply from a two-year high of 25 seen in December 2006 but it is still much higher than a low of minus 38 struck six years ago, with companies in better financial shape than during past downturns.

Sentiment among big non-manufacturers slipped to one in September from 10 in June, with confidence among small and mid-sized firms also worsening.

The plunge reinforced market expectations that the BoJ will leave its super-low interest rates on hold at 0.5 percent for the foreseeable future despite the fastest inflation in a decade in Japan.

Japan's corporate sector had been a key driver of a recovery in the world's second-largest economy after years in the deflationary doldrums.

But firms are growing more cautious about ramping up spending on new plants and equipment due to soaring raw material costs and a weaker global economy.

The combined pretax profit before extraordinary items of all the companies is expected to drop by 8.1 percent in the current fiscal year to March, the survey showed. Big manufacturers alone anticipate a decline of 10.4 percent.

Firms of all industries and sizes plan on average to reduce their capital spending by 1.3 percent this fiscal year. Large size companies, however, expect to increase investment by 1.7 percent.

Despite the drop in business confidence, Japanese stocks rose 1.24 percent in morning trade, rebounding from a three-year low following a powerful Wall Street rally overnight on hopes of a new US financial rescue package.



Gamin Gamata - Presidential Community & Welfare Service
srilankans.com - news & information
LANKAPUVATH - National News Agency of Sri Lanka
Donate Now | defence.lk

| News | Editorial | Business | Features | Political | Security | Sport | World | Letters | Obituaries |

Produced by Lake House Copyright 2008 The Associated Newspapers of Ceylon Ltd.

Comments and suggestions to : Web Editor