And in Japan, news yesterday on sentiment in the country’s vital business sector, especially the manufacturing and export sectors was even more upbeat from China. The September quarter’s Tankan survey from the Bank of Japan revealed decade high levels of confidence.
The Tankan index revealed that business conditions in Japan are at their strongest for a decade and the overall reading of the survey as a whole hit its highest levels since 1991!
But many companies report labour shortages and trouble keeping up with demand – indicating there may be a burst of new investment in coming months.
The overall Tankan index, (which covers all industries and companies of all sizes), rose by three points to a reading of +15.
That was the highest reading since September 1991, and provides further confirmation of the breadth of Japan’s recovery (as does record low unemployment).
That is also similar to the results of recent surveys of Australian business conditions by the National Australia Bank which revealed a series of new decade highs.
In Japan large manufacturers are especially confident (as the official survey of big Chinese companies at the weekend revealed – see separate story).
Confidence rose by five points to +22 in the three months to September, fuelled by strength in chemicals and machinery, thanks to the positive impact of a weaker yen
It points to a healthy pace of growth in the third quarter of the year.
The quarterly Tankan index subtracts the percentage of companies reporting bad business conditions from those reporting good to give indices ranging from -100 to +100, where figures above zero suggest a growing economy.
The survey samples more than 10,000 companies with a response rate of nearly 100% meaning it provides an unusually accurate spread of business activity compared to official statistics.
Companies of all sizes reported deepening labour shortages, with the Tankan index for employment conditions weakening by three points to -28.
The reading on production capacity also dipped by one point to -3, the lowest since 1991, as Japanese companies report they are unable to keep up with demand for the first time since the bursting of the country’s stock market bubble in 1990.
