TOKYO: Business confidence among Japan’s largest manufacturers is at its lowest since Tokyo introduced measures to kick-start the struggling economy more than three years ago, a central bank survey showed Monday. The Bank of Japan’s closely watched Tankan report comes after data showing weak growth in the second quarter and as soft inflation and spending figures on Friday underscored the wobbly recovery. The latest Tankan — a key gauge of Japan Inc’s health — missed market forecasts for a slight improvement in the mood among major firms. Sentiment among big manufacturers is wallowing at its lowest levels since Prime Minister Shinzo Abe kicked off his growth blitz, dubbed Abenomics, in 2013.
The survey contradicts Tokyo’s view that the world’s number three economy is on the upswing, said Satoshi Osanai, senior economist at Daiwa Institute of Research. “The economy is weak and certainly not in a recovery mode,” he added. “This is more confirmation that Japanese firms are facing headwinds. Conditions remain tough.” The BOJ’s quarterly survey of more than 10,000 companies is the most comprehensive indicator of how Japan is faring. It marks the difference between the percentage of firms that are upbeat and those that see conditions as unfavorable. The reading for big manufacturers was unchanged at 6, while the level for big non-manufacturers fell to 18 from 19. However, confidence among medium and small business improved slightly. Stock traders were unfazed. The benchmark Nikkei 225 index was up more than one percent in the afternoon Monday.
Officials are under intense pressure to deliver a boost to the economy with experts increasingly writing off Tokyo’s spend-for-growth policy. On Friday, official data showed spending among Japanese households tumbled in August and consumer prices fell again — putting the Bank of Japan’s 2.0 percent inflation target further out of reach. The target is a cornerstone of Abe’s faltering attempts to kickstart growth.
