BoJ Tankan survey reveals sentiment up in Japan

| April 1, 2010 | 0 Comments
BoJ Tankan survey reveals sentiment up in Japan

The Bank of Japan’s closely watched quarterly Tankan survey has revealed an improvement in business confidence in Japan.

The Tankan index revealed business confidence among major manufacturers had picked up for the fourth consecutive quarter, rising to -14 in March from -25 in December and significantly higher than the record low of -58 seen this time last year.

In the meantime, confidence among major non-manufacturers also picked up to -14 in March, from -21 in December.

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.

The survey came as struggling Japanese carmaker Toyota reported a 50.7% rise in domestic car sales last month.

Last week, Toyota announced it would suspend production at plants in France and Britain for two weeks from Monday amid safety recall problems.

The carmaker has been suffering amid major safety fears and has recalled almost 9 million vehicles over concerns about accelerator pedals and brake systems. The problems have been blamed for almost 60 deaths in the USA.

In related news this week, it was revealed Japanese industrial output fell for the first time in a year, by 0.9% in February, following strong growth in the previous month, according to official figures.

The fall was larger than many analysts had expected and comes as the economy battles with deflation.

Japanese core consumer prices fell 1.2% in February from a year earlier - representing the 12th consecutive monthly decline that Japan has been in deflation.

Deflation (where prices fall rather than increase) can be a serious threat to an economy because it deters consumers and businesses from spending in expectation of falling prices.

Japan has battled with deflation in the past and was a problem for the economy during its so-called “Lost Decade” in the 1990s in which the economy struggled with falling prices.

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