By Max Sato
TOKYO (MaceNews) – Major Japanese firms, led by carmakers and electronics makers, reported their sentiment edged up in September from three months earlier as businesses in their key markets reopened cautiously amid the lingering coronavirus pandemic, according to the Bank of Japan’s quarterly Tankan business survey released Thursday.
The key points from the survey:
* The Tankan diffusion index showing sentiment among major manufacturers rose to -27 in September from -34 in June, coming in weaker than the median economist forecast of -23. Improvements were reported by auto and electronics makers as well as refineries and general machine makers while sentiment slipped among manufacturers of lumber and wood products as well as ceramics, stone and clay.
* Looking ahead, major manufacturers expect their sentiment to rise further to -17 in December, led by firms making automobiles, iron and steel and production machinery. Companies tend to be cautious about the outlook in normal times but given how far business has fallen, many now see a rebound coming, although the pace of recovery in consumer spending remains slow.
* The Tankan index measuring sentiment among major non-manufacturers climbed to -12 in September from -17 in June, with retailers and communications firms leading the slight improvement. Confidence in this segment of the economy was also weaker than the consensus forecast for -9. Rental and leasing firms as well as services for businesses reported a decline in sentiment.
* The improvement in sentiment among smaller businesses was limited. The index for small and medium manufacturers edged up to -44 in the latest Tankan survey, which was conducted from Aug. 27 until Sept. 30, from -45 three months earlier. The index for their non-manufacturing counterparts rose to -22 from -26. Smaller manufacturers see their confidence up at -38 in December, led by carmakers and non-ferrous metal firms, but smaller non-manufacturers, such as construction firms and information service providers, project a setback, with the index forecast to slip back to -27 in December.
* The Tankan showed that major firms revised down their capital investment plans to an increase of 1.4% in the current 2020 fiscal year ending in March 2021 over the previous fiscal year, from a rise of 3.2% projected three months earlier. This was largely in line with the median economist forecast of +1.3%.
* For their part, smaller businesses expect their capex plans for fiscal 2020 to fall 16.1% from fiscal 2019, little changed from the 16.5% decrease planned in June. It was weaker than the median projection of -15.1%.