Japan Survey Shows Business Confidence Declining

Japanese manufacturers are growing increasingly gloomy on the country’s economic outlook, according to a survey released ahead of a parliamentary election to be held on 16 December.

The Bank of Japan’s (BoJ) quarterly Tankan index for the three months to December fell to a reading of -12 from -3 in the previous quarter, a result that was much worse than expected. A reading below zero indicates that pessimistic views outnumber optimists.

The report largely blamed tensions with China from the dispute over the Senkaku Islands, which have impacted on exports to one of Japan’s biggest markets, for the deterioration in sentiment. The survey raises the likelihood of further monetary easing by the central bank at its policy meeting next week.

The BoJ survey, based on a survey of 10,654 companies over the past month with a 99% response rate, showed manufacturers anticipate sentiment will remain negative in coming months, with the index forecast at -10. The outlook among car manufacturers, whose sales in China were hit by a spate of violent anti-Japanese protests, fell sharply to -9 from +19. The outlook among smaller manufacturers was significantly more pessimistic than for larger ones, at -18.

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