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Smaller Japanese firms upbeat for 1st time in 22 years

Publication Date : 17-12-2013

 

Business sentiment among small and midsize companies improved in the three months to December, with the diffusion index of the Bank of Japan’s quarterly Tankan survey turning positive, the central bank said Monday.

It is the first time in about 22 years that the DIs among small and midsize manufacturers and nonmanufacturers have entered the positive territory together.

The closely watched indexes in the central bank’s survey represent the percentage of companies seeing good business conditions minus those feeling the opposite.

The results of the survey, which the central bank released Monday, show business sentiment among large companies also improved, clearly indicating that the nation’s economy is recovering.

According to the December Tankan survey, the DI among large manufacturers improved four points from the previous survey for the July-September quarter to plus 16. The index improved for the fourth straight quarter and was at the highest level seen since plus 19 was posted in December 2007.

The DI among large nonmanufacturers increased by six points from the previous survey to plus 20, improving the fourth straight quarter. This is due to an increase in public works projects and robust condominium and housing sales because of jumps in demand ahead of the consumption tax hike in April, the bank said. Also, business performance among export-oriented companies recovered because of the yen’s recent weakening, it added.

Business sentiment among small and midsize manufacturers improved 10 points to plus 1, marking the first time the index to turn positive since December 2007.

The DI among small and midsize nonmanufacturers rose five points to plus 4, entering the positive territory for the first time in 21 years and 10 months since February 1992, when plus 5 was posted. Business sentiment among retailers and construction companies improved due to a jump in demand.

“The economic recovery started to be seen in small and midsize companies as well,” Chief Cabinet Secretary Yoshihide Suga said at a press conference Monday. “Abenomics is steadily taking hold.”

Meanwhile, companies remain cautious about the prospect of the nation’s economy ahead of April’s consumption tax hike.

The DI for forecast business conditions among large manufacturers about three months ahead deteriorated two points to plus 14. Among small and midsize manufacturers, the DI for expected business conditions dropped two points to minus 1.

In the survey, companies choose “good”, “not very good” or “bad” to describe the current business conditions. But “not very good” is excluded in calculating the DIs.

In the latest survey, 68 per cent of large manufacturers chose “not very good” while 57 per cent of small and midsize manufacturers picked the same answer.

The latest Tankan survey was conducted from November 14 through December 13, targeting 10,509 companies nationwide, of which 99.4 per cent responded.

 

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