Home / World Business
Thu, Oct 02, 2003 - Page 12 News List

Japan feeling confident; US depressed

INDICATORS The benchmark Tankan survey of business sentiment in Japan showed the first positive results in three years, while the US' Consumer Confidence Index fell


A majority of Japanese manufacturing companies felt confident about business conditions in September for the first time in nearly three years, the Bank of Japan's quarterly Tankan survey showed yesterday.

The survey said the diffusion index of current business sentiment among large manufacturers jumped to one from minus five registered in July, breaking into positive territory for the first time since the December 2000 Tankan, when the index was plus 10.

But the large non-manufacturers' index remained unchanged at minus 13, underlining the fact that the picture is not rosy all round, while economists warned the yen's strength could still hurt future sentiment.

The latest data confirmed robust external demand for Japa-nese goods has helped major manufacturers, whose improving earnings have started to benefit non-manufacturers and medium-sized and smaller firms, economists said.

"The latest figures confirmed that major manufacturers are benefiting from improving exports," said Junichi Makino, senior economist at Daiwa Institute of Research.

Makino said that there were also signs of a brighter outlook among smaller companies which have been among the hardest hit by the economic slump.

While sentiment of the auto and electronics machinery sectors improved markedly, the continued strength of the Japanese yen against the dollar might depress sentiment in the future, said Koji Hiiragi, an economist at the UFJ Institute.

"If the yen stays strong, it might pressure exports and the manufacturers," by making Japanese exports less competitive, Hiiragi said.

Meanwhile in the US, with the job market still sluggish, consumers' confidence in the economy fell more than expected last month, a private research group said Tuesday.

The Consumer Confidence Index fell to 76.8, down nearly five points from the revised 81.7 registered in August, according to the New York-based Conference Board.

The decrease was steeper than expected -- analysts were looking for a reading of 80.5. It was the biggest decline since July, when consumer sentiment fell 6.5 points to 77.

The index had bounced back in August.

"The lack of improvement in labor market conditions continues to dampen consumers' spirits," said Lynn Franco, director of the board's consumer research center.

"Despite September's retreat, consumers remain cautiously optimistic about the outlook for the next six months," she said.

"Consumer spending is likely to continue at or near current levels," Franco said.

Economists closely track consumer confidence because consumer spending accounts for two-thirds of US economic activity.

"We have enjoyed a period of optimism over the summer," said Gary Thayer, chief economist at AG Edwards & Sons Inc, referring to the tax cuts, victory in Iraq and gains in the stock market.

"But now we are seeing a more sober view of things, primarily because of jobs," Thayer said.

Comments will be moderated. Keep comments relevant to the article. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned. Final decision will be at the discretion of the Taipei Times.

TOP top