Fri, Oct 02, 2015 - Page 15 News List

Japanese business sentiment cools

SLIPPAGE:Figures suggest that the world’s third-largest economy is slowing as consumer spending is in decline, an indication of the lack of domestic market confidence

AFP, TOKYO

A slowdown in China and weakness at home dented Japanese firms’ confidence last quarter, a central bank report showed yesterday, as tepid data suggest the world’s third-largest economy has slipped into recession.

The disappointing tankan survey supplied the latest evidence that Japanese Prime Minister Shinzo Abe’s growth blitz, dubbed Abenomics, is faltering, as speculation grows that the Bank of Japan (BOJ) would have to expand its massive asset-buying plan as early as this month.

The survey of more than 10,000 companies nationwide found that confidence among major manufacturers worsened in the three months through last month, dipping to plus 12, from the last report’s plus 15.

The report is the most comprehensive indicator of how Japan Inc is faring and marks the difference between the percentage of firms that are upbeat and those that see conditions as unfavorable.

“[The result] reflects the slowdown in overseas demand, especially in the Chinese economy,” Sumitomo Mitsui Banking Corp chief economist Junko Nishioka said.

In one bright spot, sentiment among non-manufacturers picked up, which analysts said might be due to a weak yen drawing record numbers of tourists to Japan.

However, they warned that tepid consumer spending at home was a red flag.

“The important thing is how much domestic demand is going to increase going forward,” Nishioka said. “In that respect, I think we should not be too optimistic about the prospects for future business confidence.”

Analysts have warned over a return to contraction in the July-September quarter, after a contraction in the three months to June, owing to a slowdown in China, weak consumer spending at home and soft exports.

NLI Research Institute senior economist Tsuyoshi Ueno said the Bank of Japan would likely fire off more stimulus early next year.

“The Japanese economy is slowing at a pace faster than we had expected,” he said. “Policymakers had envisaged a recovery being supported by strong domestic demand, but the vision is faltering... The BOJ will have to fire additional easing.”

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