Japan's large manufacturers were more optimistic about their business outlook in the three months through December, marking the third straight quarter of improvement, according to a central bank survey released Friday.
The Bank of Japan "tankan" survey is the latest indicator that Japan's economy may be recovering, largely on the back of export growth. Tankan indexes measure the percentage of companies saying conditions are better, minus the percentage saying they are worse.
The index for big manufacturers for the latest quarter stood at plus 11, up from plus one in the previous reading in September and above expectations of plus six by analysts surveyed by Dow Jones Newswires and Nikkei News.
The sentiment index for large non-manufacturers, who mostly do business in Japan, improved to minus nine from minus 13 in September, matching the forecast.
Welcoming the results, Japan's economy and banking minister Heizo Takenaka told reporters yesterday the December survey shows the economy remains on a steady recovery track.
"Judging from the tankan results, the economy is showing positive moves toward a pickup, and this can be said about capital expenditures as well," he said.
Economists said Japan's economic outlook is positive at least for the first half of next year primarily because of stronger exports.
"There's been a broad improvement in the economy as a result of export stimulus and that should run quite a bit longer," said Richard Jerram at ING Securities, adding that exports might slow in the second half of next year.
Large manufacturers were less optimistic for the coming quarter and predicted a sentiment index reading of plus eight, suggesting expectations of a stronger yen might begin to weigh on their business outlook in coming months.
The tankan showed that large manufacturers predicted an average dollar-yen exchange rate of ¥114.68 for the current fiscal year through March next year, compared to their projection of ¥117.99 three months ago.
For the second half of the fiscal year from October, the companies predicted an average dollar exchange rate of ¥111.4, compared to ¥117.53 in the prior survey and above recent market levels of around ¥108.
Large non-manufacturers expect a sentiment reading of minus seven for the March survey.
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