Japan executives more upbeat despite market turmoil

FE Team | Published: September 21, 2007 00:00:00 | Updated: February 01, 2018 00:00:00

TOKYO, Sept 20 (AFP): Japan's top executives have become more confident for the first time in a year, a survey showed today, providing some welcome good news on Asia's largest economy after a slew of gloomy data.
The government said its index of business confidence among large Japanese companies rebounded to 6.2 in the three months to September from minus 0.9 per cent in the previous quarter.
The index had now returned to the same level as the first quarter of the 2007 but it remains below a high of 10.5 seen a year ago.
It was also well short of a figure of 12 predicted by respondents in the previous survey.
Analysts gave the rebound a cautious welcome, noting that the survey was taken after credit turmoil erupted on global financial markets due to the fallout from rising defaults in US subprime mortgages to risky borrowers.
But they said that the central bank's survey of business confidence, known as the Tankan, which is more closely watched, may still reveal a weakening of business confidence next month as the index is calculated differently.
"Today's survey at least confirmed that the key basis for the economic recovery in Japan has not fallen apart," said Mamoru Yamazaki, chief economist at RBS Securities.
"But given the subsequent spread of the subprime loan problem, the appreciation of the yen and emerging concerns about the US economy in the wake of a poor US jobs report, the headline number for large manufacturers is likely to decline in the September Tankan survey," Yamazaki said.
The finance ministry said it was unclear whether the subprime loan problems and the stronger yen had affected the result of its survey.
"We think that the underlying solid trend in the corporate sector is intact, given increased shortage in labour and the fact that companies still see profit growth," a ministry official said.
The index is calculated by subtracting the percentage of large firms reporting worsening business conditions from the percentage of those reporting an improvement.
Respondents expect the headline index to rise further to 9.2 in the fourth quarter, but to dip to 8.6 in the first quarter of next year.
Concerns about the health of the Japanese economy have grown since the government reported gross domestic product shrank in the three months to June for the first time in three quarters due to falling corporate capital spending.