Japan bank survey optimistic

[Ulhas Joglekar]

14 December 1999
Japan bank survey optimistic
TOKYO: In a positive sign for Japan's economy, the central bank said on
Monday that business confidence at major manufacturing companies improved
for the fourth consecutive quarter.
In its closely-watched "tankan" survey for December, the Bank of Japan said
sentiment among large manufacturers had brightened to a figure minus 17 from
minus 22 in the last survey in September.
The "tankan" measures the percentage of firms seeing business conditions
improve minus the percentage seeing conditions worsen. The central bank
surveyed 9,206 companies.
Despite the improvement, the result came in just below analysts'
expectations. Economists surveyed by Dow Jones Newswires had forecast that
the index of business sentiment at big manufacturers would improve to minus
15.
Large manufacturers also exhibited optimism that conditions will improve by
the time of the next survey. They see sentiment advancing to a figure of
minus 9 by March.
The rise in business confidence comes even as Japan's economy shrank more
than expected in the July-September quarter, following two straight quarters
of growth.
Japan's gross domestic product - the measure of all goods and services
produced within its borders - fell 1.0 percent for the third quarter of the
calendar year.
Japan's economy is struggling to emerge from its deepest downturn in a half
century.
``The improvement of business confidence took place even amid the
appreciation of the yen,'' said Makoto Ishikawa, senior economist at Japan
Research Institute. ``This recovery (in sentiment) will help deflect
pressure on the bank to ease monetary policy further,'' he said.
The latest survey was taken in a period during which the dollar traded
roughly around 103 yen. Three months earlier, the dollar was quoted around
110 yen.
A stronger yen is generally considered a negative for Japan's economy, as it
usually makes Japanese goods more expensive overseas and can potentially
hurt profits at the country's big exporters.
In addition to large manufacturers, medium and small manufacturers said that
business sentiment improved in December compared with September.
Small manufacturers expect a further gain in the next survey, to be released
in March, while medium-sized manufacturers predict sentiment to remain flat.
In the non-manufacturing sector, large, medium and small companies said
business confidence improved in December from September, and all predicted
that confidence will rise again in March.

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