- POSTED: 16 Dec 2013 08:25
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Japanese business confidence has soared to a six-year high, the Bank of Japan said on Monday, underscoring growing optimism among major companies.
TOKYO: Japanese business confidence has soared to a six-year high, the Bank of Japan said on Monday, underscoring growing optimism among major companies despite a slowdown in the world's third-biggest economy.
The BoJ's quarterly Tankan survey, which polled more than 10,500 firms, surged to its strongest level since December 2007, with a reading for large manufacturers rising to plus 16 from plus 12 in September.
The non-manufacturers' index also jumped to plus 20 from plus 14, the best reading in more than six years. The numbers represent the percentage of respondents saying conditions are good minus those who say they are poor.
The report was "positive overall", said Norinchukin Research Institute chief economist Takeshi Minami.
"It's not that dramatic as we saw in the previous Tankan, but the latest outcome confirmed sentiment even among small and mid-sized companies is improving," he added.
Some analysts expect the BoJ will unleash further monetary easing measures to boost the economy after growth slowed markedly, highlighting the challenges faced by Tokyo in its bid to stoke growth with big government spending and monetary easing by the central bank.
Japan's third-quarter economic growth came in at a final reading of 0.3 percent, down from an initial figure of 0.5 percent -- and a sharp slowdown from 0.9 percent growth in the previous quarter.
On an annualised basis, which stretches the data across a full year, growth was 1.1 percent in the quarter against an initial reading of 1.9 percent.
Japan's once-anaemic economy had been outpacing other G7 nations as a policy blitz led by Prime Minister Shinzo Abe helped push down the yen, boosting exporters and sparking a stock market rally.
But the United States is now out-performing Japan, expanding at a revised 3.6 percent annualised rate in the third quarter.
The BoJ survey had little impact on investors, with the Nikkei 225 index down 0.61 percent in morning trade.
Analysts say investors are cautious ahead of the US Federal Reserve's two-day policy meeting starting on Tuesday as speculation grows that it will start reeling in its $85 billion-a-month bond buying plan, known as quantitative easing.
The BoJ's own two-day meeting starts on Thursday, with all eyes on any fresh moves from policymakers after the bank unleashed a huge monetary easing plan in April.
There is speculation it may expand the programme -- which injects vast sums into the financial system -- as growth slows and consumers prepare for a tax hike that critics fear will derail a budding recovery.
"The focus (now) is whether this good mood will continue to be seen even after next April's sales tax hike," Minami told Dow Jones Newswires, referring to the BoJ survey.
Tokyo has approved a spending package worth almost $54 billion to offset the tax hike -- to 8.0 percent from 5.0 percent -- seen as crucial for bringing down Japan's huge national debt.
Analysts have warned that Abe's bold pro-growth programme is not enough on its own without promised economic reforms.
A proposed shake-up, including loosening labour laws and signing free trade deals, is seen as key to ushering in lasting change in an economy plagued by years of deflation.