Japanese companies remained deeply pessimistic last month even as a central bank survey showed their confidence improving from record lows, suggesting the world’s second-largest economy is crawling rather than sprinting out of recession.
In the Bank of Japan’s quarterly tankan survey released yesterday, the closely watched sentiment index for large manufacturers stood at minus 48 last month. Three months ago it hit minus 58 in the sixth straight quarter of decline and the worst reading ever.
The figure represents the percentage of companies that believe business conditions are good minus those saying conditions are unfavorable.
The lower the number, the greater the pessimism.
The latest result marks the first uptick in two-and-a-half years but undershot an average forecast of minus 43 in a survey of 11 economists by The Associated Press. Other measures in the tankan revealed troubling weaknesses likely to hamper recovery in the world’s second-biggest economy.
The mood may have brightened slightly for big companies, but it wasn’t enough to convince them to spend more money. Major manufacturers and non-manufacturers sharply reduced their capital spending plans and now expect to cut expenditures by an average 9.4 percent this fiscal year through March 2010.
“Although the current economy is improving, companies cannot find confidence that this recovery will continue even if domestic and overseas economic stimulus packages run their course in the future,” said Kyohei Morita, chief economist at Barclays Capital in Tokyo.
Based on the latest tankan, Japan’s nascent economic recovery is neither broad nor self-sustaining, he said.
The sentiment index for big non-manufacturers inched up to minus 29 from minus 31 in March.
However, confidence at other companies barely moved. Sentiment among medium-sized firms stood at minus 55 from minus 57, while that for small manufacturers stayed flat at minus 57.
For big manufacturers, the improvement in sentiment stemmed mainly from industries benefiting from global stimulus measures, analysts said.
Companies in the tankan say they still have too many workers and too much capacity.
Morita expects the jobless rate to at least hit a record high of 5.7 percent by the end of the year.
The Bank of Japan surveyed a total of 10,319 companies between May 26 and June 30, of which 99 percent responded.
The tankan helps the central bank guide monetary policy, but board members are not expected to change interest rates when they meet.
NO-LIMITS PARTNERSHIP: ‘The bottom line’ is that if the US were to have a conflict with China or Russia it would likely open up a second front with the other, a US senator said Beijing and Moscow could cooperate in a conflict over Taiwan, the top US intelligence chief told the US Senate this week. “We see China and Russia, for the first time, exercising together in relation to Taiwan and recognizing that this is a place where China definitely wants Russia to be working with them, and we see no reason why they wouldn’t,” US Director of National Intelligence Avril Haines told a US Senate Committee on Armed Services hearing on Thursday. US Senator Mike Rounds asked Haines about such a potential scenario. He also asked US Defense Intelligence Agency Director Lieutenant General Jeffrey Kruse
INSPIRING: Taiwan has been a model in the Asia-Pacific region with its democratic transition, free and fair elections and open society, the vice president-elect said Taiwan can play a leadership role in the Asia-Pacific region, vice president-elect Hsiao Bi-khim (蕭美琴) told a forum in Taipei yesterday, highlighting the nation’s resilience in the face of geopolitical challenges. “Not only can Taiwan help, but Taiwan can lead ... not only can Taiwan play a leadership role, but Taiwan’s leadership is important to the world,” Hsiao told the annual forum hosted by the Center for Asia-Pacific Resilience and Innovation think tank. Hsiao thanked Taiwan’s international friends for their long-term support, citing the example of US President Joe Biden last month signing into law a bill to provide aid to Taiwan,
China’s intrusive and territorial claims in the Indo-Pacific region are “illegal, coercive, aggressive and deceptive,” new US Indo-Pacific Commander Admiral Samuel Paparo said on Friday, adding that he would continue working with allies and partners to keep the area free and open. Paparo made the remarks at a change-of-command ceremony at Joint Base Pearl Harbor-Hickam in Hawaii, where he took over the command from Admiral John Aquilino. “Our world faces a complex problem set in the troubling actions of the People’s Republic of China [PRC] and its rapid buildup of forces. We must be ready to answer the PRC’s increasingly intrusive and
STATE OF THE NATION: The legislature should invite the president to deliver an address every year, the TPP said, adding that Lai should also have to answer legislators’ questions The Chinese Nationalist Party (KMT) yesterday proposed inviting president-elect William Lai (賴清德) to make a historic first state of the nation address at the legislature following his inauguration on May 20. Lai is expected to face many domestic and international challenges, and should clarify his intended policies with the public’s representatives, KMT caucus secretary-general Hung Meng-kai (洪孟楷) said when making the proposal at a meeting of the legislature’s Procedure Committee. The committee voted to add the item to the agenda for Friday, along with another similar proposal put forward by the Taiwan People’s Party (TPP). The invitation is in line with Article 15-2