BoJ Tankan survey reveals fall in business sentiment

| December 15, 2010

The Bank of Japana��s (BoJ) closely watched quarterly Tankan survey has revealed business confidence has dipped – hit by a strong yen and slowing exports.

The influential Tankan index revealed business confidence among major manufacturers fell for the first time in almost two years.

The Tankan figures are closely monitored by the BoJ when deciding monetary policy.

The index fell to a reading of 5 from 8 last quarter but was slightly better than forecasts of a reading of 3.

The survey hit a record low of -58 in early 2009, but has gradually recovered since that time.

The Tankan, which surveys 10,000 firms, measures the percentage of companies that think business conditions are good, minus those that believe they are bad.

Economists believe the survey suggests that firms are bracing themselves for tough times ahead as the strong yen continues to weaken demand for exports and threatens the economic recovery.

In recent weeks, the yen has reached 15-year highs against the US dollar and traded at 83.81 this morning.

Meanwhile, top manufacturers, who participated in the survey, said they expected confidence to fall back to -2 by March next year.

Last week, official figures revealed the Japanese economy grew faster than estimated in the third quarter due to stronger corporate spending.

The worlda��s third largest economy grew by 1.1% in the July to September period, up from the first estimate of 0.9%.

On an annual basis, the economy expanded by 4.5% from an earlier estimate of 3.9% and exceeded expectations of a revision to 4.1%.

The Japanese Government recently approved a A?39 billion stimulus package a�� designed to boost the fragile economic recovery.

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