Japanese business confidence has improved for a sixth straight quarter, but companies are expecting a gloomy end of the year amid increased global economic uncertainty, the Bank of Japan said yesterday.
Sentiment among major manufacturers rose to a higher-than--expected reading of eight this month from one in June, according to the central bank’s closely watched Tankan survey of more than 11,000 firms.
The latest figure shows that optimists still outweigh pessimists among major manufacturers in terms of their view of Japan’s economic climate, in only the second positive reading since June 2008.
However, the forecast for the December survey is for a reading of minus one, suggesting that companies expect conditions to sharply worsen in the months ahead, as Japan remains beset by deflation and the effects of a strong yen.
The strong yen has hurt exporters, making their goods more expensive and eroding companies’ overseas profits when repatriated. Exports, a crucial driver for -Japan’s growth, expanded at their slowest pace this year last month, as the impact of the yen’s strength and softening overseas demand illustrated the risks threatening a fragile recovery.
The reading was made with companies expecting an exchange rate of ￥89.44 to the US dollar, higher than in the previous survey, but much lower than current levels, which if sustained will further erode confidence.
Yesterday, videogame giant Nintendo slashed its expected net profit and cut sales projections for the year to March next year, citing the recent strength of the yen, among other factors.
The console maker slashed its full year net profit forecast 55 percent from ￥200 billion (US$2.38 -billion) to ￥90 billion with net sales expected to fall from ￥1.4 trillion to ￥1.1 trillion.
Meanwhile, the US dollar hit an eight-month low yesterday, driving gold to a record high, on rising expectations the US Federal Reserve will act again to help the struggling economy.
Gold rose as the Fed and Bank of Japan look to pump more funds into markets via bond purchases and other measures to help their struggling economies.
Gold closed at a record-high US$1,310.00 to US$1,311.00 an ounce in Hong Kong yesterday as traders sought the safe haven amid uncertainty over the global economy. The precious metal was well up from Tuesday’s finish of US$1,287.00 to US$1,288.00.