TOKYO — Japanese business sentiment improved in the first three months of 2013, a central bank survey showed Monday, after Prime Minister Shinzo Abe’s aggressive monetary and fiscal policy prescriptions helped to weaken the yen and bolster share prices.
The survey was made before the Bank of Japan’s first policy-setting meeting under its new governor, Haruhiko Kuroda. The board is set this week to expand monetary stimulus and debate an overhaul of its policy framework.
In the survey — conducted each quarter and called the tankan — big manufacturers’ mood improved after two consecutive quarters of deterioration, with the benchmark index rising 4 points to minus 8. That was roughly in line with a median forecast among analysts of minus 7.
The tankan’s sentiment indexes are derived by subtracting the percentage of respondents who say conditions are poor from those who say they are good. A negative reading means pessimists outnumbered optimists.
The manufacturers expect business conditions to improve in the three months ahead, with an index gauging the outlook at minus 1.
“The result reflected companies’ expectations that a weaker yen and policy steps pursued by the government will have a positive impact on the economy,” said Tatsushi Shikano, senior economist at Mitsubishi UFJ Morgan Stanley Securities in Tokyo. “The tankan outcome aside, the B.O.J. will ease policy at its April 3-4 policy review, as the governor is expected to make good on his promise of pursuing bold monetary easing.”
The tankan report, a touchstone for Bank of Japan policy makers, underscores the view that the Japanese economy is gradually bouncing back from a recession last year and headed for a moderate recovery driven in part by a pickup in global demand.
Mr. Abe’s ambitious push for big stimulus spending and monetary easing by the central bank — dubbed Abenomics — has also offered some relief to the export-reliant economy by helping to weaken the yen and lift Tokyo share prices.
Big manufacturers expect the dollar to average ¥85.22 in the financial year that began Monday, up sharply from their estimate of ¥80.56 for the previous year. That is still much lower than the current level of ¥94 to the dollar, suggesting that exporters may see further increases in revenue if the level holds.
In a sign of a broadening recovery, the sentiment index for big companies in the service industry improved 2 points to plus 6, the tankan showed.
The index for the three months ending in June was at plus 9. But big companies plan to cut capital expenditure 2 percent in the current business year, suggesting that the positive mood needs to be sustained longer before companies are persuaded to increase spending.
Analysts expect the Japanese economy to have grown 1 percent in the financial year that just ended, and to expand 2.2 percent in the current financial year.
In a separate quarterly survey by the central bank, nearly three-quarters of Japanese households expected prices to rise a year from now, the highest ratio in more than four years, suggesting that bolder monetary stimulus is finally thawing public perceptions of intractable deflation.
An index gauging how households see economic conditions a year from now — subtracting households that expect economic conditions to worsen from those that see improvements — also improved.
The gain, the second in two quarters, sent the index to the highest level since the central bank began the survey in 1996.
The ratio of households that expect prices to rise a year from now stood at 74.2 percent in March, up from 53 percent in December.
Only 3.9 percent expect prices to fall a year ahead, down from 7.7 percent in December. The survey was conducted from Feb. 7 to March 6 and asked households for their views on the economy and prices.
Looking five years ahead, 81.6 percent of households expected prices to rise, the highest ratio since June 2008, while 4.5 percent forecast declines, the survey showed.
Article source: http://www.nytimes.com/2013/04/02/business/global/positive-shift-in-economic-sentiment-in-japan.html?partner=rss&emc=rss