The Bank of Japan became more optimistic about the economy for the first time since December because of signs that an export-led recovery is spreading to consumers and service companies.
"Japan's economy continues to recover gradually, and domestic demand is becoming firmer," the central bank said in its monthly economic assessment released in Tokyo yesterday.
"Improvements in business sentiment have been spreading across industries," it said.
Consumers are spending more at retailers including Ito-Yokado Co as a rally in share prices and lower unemployment boost confidence. Executives at large retailers and service companies were the most optimistic in 11 years, the central bank's quarterly Tankan survey showed this month.
Gains in consumer spending, which makes up more than half of the world's second-biggest economy, may help sustain a recovery from the third recession since 1991 as a stronger yen curbs exports and capital spending slows. Another report yesterday showed that machinery orders grew a less-than-expected 4.9 percent in February.
"The focus has shifted from export-related factors to domestic-related factors," said Ryo Hino, an economist at J.P. Morgan Securities Asia Ltd.
"We've had a steady recovery now and that's given time for the spark from exports to permeate the rest of the economy," Hino said.
Central bank Governor Toshihiko Fukui and his eight policy board colleagues kept interest rates at almost zero yesterday and refrained from pumping more money into the economy. The bank left the upper limit of the target for reserves available to lenders at ?35 trillion ($328.8 billion).
Spending by households headed by a salaried worker rose 6.9 percent in February from a year earlier, the biggest gain in 21 years.
Ito-Yokado, Japan's second-largest retailer, said profit rose 15 percent to ?53.6 billion in the year ended Feb. 29 and is forecasting a similar gain this year. Merrill Lynch Japan Securities Ltd and Goldman Sachs Japan Ltd raised their growth forecasts this week, citing a recovery in consumer spending.
Economy Minister Heizo Takenaka said on Sunday that the economy probably grew as much as 3 percent in the fiscal year ending last month, exceeding the government's forecast of a 2 percent expansion made in December, and the 1.2 percent growth recorded in fiscal 2002.
Accelerating economic growth sparked a 47 percent rally in the Nikkei 225 Stock Average last fiscal year, the biggest gain in 31 years. In the past month, retailers such as Ito Yokado have been among the biggest contributors to the Nikkei's gain, alongside machinery makers including Advantest Corp. The Nikkei fell 1.6 percent to 11,897.51 at the 3 pm close of trading in Tokyo.
"Exports have recently increased substantially, and business fixed investment continues its path of recovery," the bank said in its report. "Japan's economy is expected to gain further momentum gradually."
Tropical Storm Gaemi strengthened into a typhoon at 2pm yesterday, and could make landfall in Yilan County tomorrow, the Central Weather Administration (CWA) said yesterday. The agency was scheduled to issue a sea warning at 11:30pm yesterday, and could issue a land warning later today. Gaemi was moving north-northwest at 4kph, carrying maximum sustained winds near its center of up to 118.8kph and gusts of 154.8kph. The circumference is forecast to reach eastern Taiwan tomorrow morning, with the center making landfall in Yilan County later that night before departing from the north coast, CWA weather forecaster Kuan Shin-ping (官欣平) said yesterday. Uncertainty remains and
SEA WARNING LIKELY: The storm, named Gaemi, could become a moderate typhoon on Wednesday or Thursday, with the Taipei City Government preparing for flooding A tropical depression east of the Philippines developed into a tropical storm named Gaemi at 2pm yesterday, and was moving toward eastern Taiwan, the Central Weather Administration (CWA) said. Gaemi could begin to affect Taiwan proper on Tuesday, lasting until Friday, and could develop into a moderate typhoon on Wednesday or Thursday, it said. A sea warning for Gaemi could be issued as early as Tuesday morning, it added. Gaemi, the third tropical storm in the Pacific Ocean this typhoon season, is projected to begin moving northwest today, and be closest to Taiwan on Wednesday or Thursday, the agency said. Today, there would likely
DISRUPTIONS: The high-speed rail is to operate as normal, while several airlines either canceled flights or announced early departures or late arrivals Schools and offices in 15 cities and counties are to be closed today due to Typhoon Gaemi, local governments announced last night. The 15 are: Taipei, New Taipei City, Taoyuan, Tainan, Keelung, Hsinchu and Kaohsiung, as well as Yilan, Hualien, Hsinchu, Miaoli, Chiayi, Pingtung, Penghu and Lienchiang counties. People should brace for torrential rainfall brought by the storm, with its center forecast to make landfall on the east coast between tonight and tomorrow morning, the Central Weather Administration (CWA) said. The agency issued a sea warning for the typhoon at 11:30pm on Monday, followed by a land warning at 11:30am yesterday. As of
CASUALTY: A 70-year-old woman was killed by a falling tree in Kaohsiung as the premier warned all government agencies to remain on high alert for the next 24 hours Schools and offices nationwide are to be closed for a second day today as Typhoon Gaemi crosses over the nation, bringing torrential rain and whipping winds. Gaemi was forecast to make landfall late last night. From Tuesday night, its outer band brought substantial rainfall and strong winds to the nation. As of 6:15pm last night, the typhoon’s center was 20km southeast of Hualien County, Central Weather Administration (CWA) data showed. It was moving at 19kph and had a radius of 250km. As of 3pm yesterday, one woman had died, while 58 people were injured, the Central Emergency Operation Center said. The 70-year-old