Asia Times: Japanese business confidence takes a turn for the better



	April 08, 1999	atimes.com

Japan Economy

Japanese business confidence takes a turn for the better

TOKYO - Confidence at companies both large and small has improved over the past three months, according to the Bank of Japan's quarterly survey of business sentiment forMarch released Monday.

The results of the latest ''tankan'' support earlier claims by the central bank that Japan's economic decline is coming to an end.

The diffusion index - defined as the percentage of optimistic companies minus the percentage of pessimistic firms - rose 2 points from the previous poll to minus 47 for large manufacturers, the first increase in 21 months.

The figure for large non-manufacturers showed a 5 point improvement tominus 34.

The diffusion index (DI) for smaller manufacturers stood at minus 53, aslight recovery from the record low recorded in the priorsurvey. But improvement was seen among smallernon-manufacturers for the second straight quarter.

Analysts say the better report reflects the stock market'srecovery and the fact that companies are having an easier timewhen it comes to raising funds. But most add that the economyis not out of the woods yet, as companies remain hesitantabout capital spending and employment.

Both large and smaller companies stated that funds areeasier to come by since the Bank of Japan eased monetary policy, theJapan Development Bank began a special loan program and thegovernment introduced an extra loan guarantee scheme.

Even so, corporations still plan to reduce capitalinvestment by 13.0% in the fiscal year which started Thursday.Many firms also said they feel overstaffed, which suggestsfurther job cuts are on the way.

BOJ officials were quick to point out that although thereport is not quite so negative as the previous one, it is tooearly to form an optimistic view on business trends.

''Business sentiment remained bleak but signs of improvementwere seen over a broad range of industries,'' said a spokesman.Yet ''there is a clear gap between a better DI on the onehand and plans for lower spending and employment on theother,'' he added.

With the March report, the central bank decided toplace greater emphasis on the ''all enterprises'' part of thesurvey, which reflects input from over 9,000 companies, inorder to add to the accuracy of its findings. It previouslyconcentrated on the ''principal enterprises'' survey, whichincludes responses from around 700 firms.

(Asia Pulse/Nikkei)

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©1999 Asia Times Online Co., Ltd.