We had a big hint about the loss of confidence in Japanese business yesterday after the March 11 quake and tsunami, but not about the damage done by the Fukushima nuclear crisis which continues.
The Bank of Japan yesterday re-released its Tankan survey to show the breakdown on responses it received from companies larger and small before and after the March 11 disasters.
The pre-March 11 responses were released on Friday and they showed a slight improvement in sentiment among big manufacturers.
But yesterday’s release showed that the sentiment index among major manufacturers fell in the April-June period, according to responses received after March 11.
The diffusion index measuring business conditions for April to June among big manufacturers whose responses were received March 12 to March 31 worsened to minus 2, compared with 2 in the full March Tankan released Friday.
The figure represents the percentage of companies saying business conditions are good minus those saying conditions are bad.
The index measures the percentage of firms that say conditions are good minus those that say conditions are bad — meaning that any figure above zero indicates general, if cautious, optimism in the corporate sector.
And sentiment among medium-sized manufacturers in the April-June period was set to fall from "minus three" before the quake to "minus seven" according to those polled afterwards.
The central bank considers the Tankan a key source of information when formulating monetary policy, but the March survey won’t be a good indicator because of the huge split before and after March 11.
The central bank meets Wednesday and Thursday of this week.
Around 23% of companies surveyed didn’t reply to the survey until after March 11.
Tokyo economists quoted by various newsagencies expect the next Tankan (to be released July 1) indexes to show even more deterioration because the impact of the disasters will be clearer by then, and firms will have had more time to gauge the effects on their businesses.
The mood is also much more negative for smaller companies that depend heavily on the domestic economy.
The outlook for small manufacturers worsened to minus 18 from minus 16, while small non-manufacturers were highly pessimistic at minus 29 from minus 27 in the overall survey.
These companies generally take much of the pain whenever there’s a slump in Japan. Many have already suffered in the northeastern area hit by the disasters.
The Fukushima nuclear crisis worsened the next week (from around March 15/16) so the impact of that on sentiment wasn’t clear from the Tankan results yesterday.
Meanwhile the Japanese government expects that it will be several months before radioactivity stops being released from the Fukushima Daiichi nuclear plant.
Chief Cabinet Secretary Yukio Edano told a news conference that "While it may not be feasible, we have been asking for other possibilities to be explored to shorten that period", noting that the government and the plant’s operator, Tokyo Electric Power Co, are considering multiple approaches to halting the nuclear crisis.
Goshi Hosono, a special adviser to Prime Minister Naoto Kan, said earlier in the day that the government has set a target of "several months" for the release of radioactive substances from the plant to be stopped.
"What will follow that stage is the goal of stabilizing the plant by installing a perfect cooling mechanism for the reactors," Hosono told a Fuji TV news program.
NHK TV reported yesterday that radiation levels on the ground have gradually decreased or have stabilized in many locations around the Fukushima Daiichi nuclear plant.
"Experts say these readings do not pose a threat to human health," the network said.
NHK also said that Japan’s financial authorities will give companies affected by the disasters in northeastern Japan more time to submit their financial statements.
Many firms have been unable to ascertain the complete scope of their losses.
