Japanese manufacturers’ confidence dives: BoJ survey
Confidence among Japanese manufacturers hit a near three-year low in
the final months of 2012, a Bank of Japan (BoJ) survey showed Friday,
adding to concerns about the already weak economy.
The central bank's quarterly Tankan survey came just days after
official figures showed the world's third-largest economy shrank in the
July-September period, buffeted by a weak global outlook, a strong yen
and a spat with China.
It also comes ahead of national polls Sunday that are expected to see
Prime Minister Yoshihiko Noda ousted in favour of Shinzo Abe, who has
promised to press more aggressively for a looser monetary policy.
The worst Tankan results since the start of 2010 would likely heap
pressure on Japan's central bankers to step up their economic offensive
at a policy meeting next week, analysts said.
“Pressure on the Bank of Japan for more monetary easing will
inevitably increase,” said Tsuyoshi Ueno, senior economist at NLI
Research Institute in Tokyo.
“The survey showed manufacturers are seriously concerned about the
economy.” Sentiment among large manufacturers, including automakers and
technology firms, plunged to minus 12 from minus three in the third
quarter. Economists had expected a reading of minus 10. The survey of
over 10,000 firms shows the percentage of companies saying business
conditions are good minus those saying they are bad and are a key
measure used by the BoJ in formulating monetary policy.
“The survey suggested that there remains the risk that the expected
economic recovery the BoJ assumes could come even later than the central
bank is currently envisaging,” said Yoshiro Sato, an economist at Credit
Also Friday, revised official data showed that Japan's factory output
rose 1.6 percent in October, slightly down from a preliminary 1.8
percent expansion. The uptick in industrial production data had marked a
glimmer of hope among a batch of otherwise gloomy economic figures.
Friday's Tankan also offered up some positive news with large
Japanese firms planning to boost their capital spending by 6.8 percent
on-year through March, suggesting they see a pickup in the economy going
into next year.
The index for large, non-manufacturers such as real estate and
telecom firms also stayed in positive territory in the survey.
Japan's economy has been hit hard by financial turmoil in Europe, an
export-sapping strong yen and a diplomatic row with major trade partner
China, dousing hopes it had cemented a recovery after last year's
quake-tsunami disaster. The nation's central bank has launched two major
policy easing measures since September after its counterparts in the US
and Europe also took steps to fight a slowdown in the global economy.
But critics, notably among them Abe, have called on the BoJ to take a
more aggressive stance to spur growth.
Abe, head of the main opposition Liberal Democratic Party and a
former prime minister, has repeatedly vowed to press the bank on the
issue if he is elected to Japan's top political job. He said he wants
the central bank to buy government bonds -- effectively printing money
-- to generate inflation, in a bid to drag Japan out of the deflationary
spiral that has haunted its economy for years.
While the bank in October expanded its asset-buying programme by 11
trillion yen ($135 billion) to 91 trillion yen it decided last month to
hold off any new measures despite warning the economy was “expected to
remain relatively weak for the time being”.
Abe's comments and expectations he will be successful on Sunday have
helped send the yen tumbling against the dollar and the euro. Adding to
the economy's more recent woes is a diplomatic row between Tokyo and
Beijing over an East China Sea island chain that sparked a consumer
boycott of Japanese products, including key exports such as cars and