Confidence remains in short supply among Japan’s large and medium sized businesses, from manufacturing, to services and financials.
Hot on the heels of the surprise sharp cut in third quarter investment by industry which caused the second estimate of third quarter growth to be slashed last week, major Japanese companies have revealed plans for bigger cuts in coming months.
While the Bank of Japan’s Tankan revealed a small improvement in overall sentiment in the December quarter survey which was released yesterday, the tone and direction of the report was still negative..
Large manufacturers said they plan to cut capital spending by 13.8% on average for the current fiscal year ending March 2010, a larger projected drop than the 10.8% cut registered in the September Tankan.
That points towards the trend seen in September where there was a cut in investment of 2.8% overall (for all companies) compared with the first GDP estimate for a rise of 1.6%.
That drove much of the sharp cut in third quarter growth to 0.3% from 1.2%.
Sentiment among large manufacturers ended up a bit better than expected with at minus 24 in December compared with minus 33 in September, the central bank said in Tokyo yesterday.
A negative number means pessimists outnumber optimists.
The reading was above market forecasts for minus 27.
The index improved 15 points in September and 10 points in the June period, when it climbed from a record low of minus 58.
The economy grew for the first time in five quarters in the June quarter, but the growth rate has slowed in the following three months.
That led to suggestions the Tankan would confirm a slowing in the return of confidence, which it has, but there has been another improvement nevertheless.
Confidence among large service sector companies rose to minus 22 from minus 24 in the September Tankan.
Sentiment among medium-sized manufacturers stood at minus 30 from minus 40, while the reading for small manufacturers improved to minus 40 from minus 52 in September.
The businesses also saw the yen trading around 92.9 to US dollar, up from 94.8 to the Dollar in the September quarter.
The Bank of Japan surveyed 10,116 companies between November 9 and December 11 for the new Tankan.
