Survey shows Japan business mood improves after disaster

Oct 3, 2011, 0:19 GMT

Tokyo - Sentiment among large Japanese manufacturers improved last quarter in a sign of recovery from the March earthquake and tsunami, the Bank of Japan's Tankan survey showed Monday.

The survey index for July-September rose to plus 2, from minus 9 in the previous quarter.

The figure matched the forecast by economists in a poll conducted by the Kyodo News agency.

Sentiment among large manufacturers was expected to climb to plus 4 in the next quarter, the survey found.

The March 11 disaster, which left some 15,800 people dead and more than 3,900 missing in the north-east, destroyed production facilities and disrupted supply chains. Many manufacturers were forced to halt domestic operations.

Business mood among medium-sized manufacturers also rose to minus 3 from minus 12 three months ago, while the index for small manufacturers were up to minus 11 from minus 21.

The index of large non-manufacturers' sentiment rose to plus 1, also up from minus 5, the survey showed.

Large companies in both the manufacturing and non-manufacturing sectors said they planned to increase capital investment by 3 per cent in the current financial year through March 2012, down from 4.2 per cent in the previous survey.

Japan's economy 'has been picking up steadily while the supply-side constraints caused by the earthquake disaster have been mostly resolved,' the central bank said in early September.

The economy 'is expected to return to a moderate recovery path during the second half of the fiscal year' which ends in March, backed by an increase in exports and a rise in domestic demand, the bank said.

The bank decided in early August to expand its asset purchase programme to 50 trillion yen (648 billion dollars) from 40 trillion yen, amid growing pressure from the government to spur the economy.

Industrial production climbed a seasonally adjusted 0.8 per cent in August from the previous month for the fifth consecutive month of increase, the Ministry of Economy, Trade and Industry said Friday in a preliminary report.

'Industrial production has almost recovered' from the March disaster, the ministry said.

But the yen's strength, European debt woes and slow growth in the US economy threaten the economic recovery in export-reliant Japan.

The dollar was hovering around the lower-77-yen range on Monday morning, near the record low of 75.94 yen marked in mid-August.

A strong yen makes Japanese goods more expensive overseas and erodes repatriated earnings.