An improvement in the Japanese business sentiment was recorded in the October-December quarter, marking the second straight quarter of such a development, according to an important central bank survey released on Monday.
According to analysts, this is welcome sing sign for the country’s economy as it is till attempting ot stage a rebound after the novel coronavirus pandemic hit earlier in the year.
But because of a recent bout of resurgence of Covid-19 infections in the country, capital expenditure plans for the current fiscal year ending in March next year have been slashed companies as they bow view the resurgence of the infections as a sign that a recovery for the third largest economy of the world will be fragile and slow.
The Bank of Japan’s closely watched “tankan” survey showed that compared to a value of minus 27 in September, the headline index for big manufacturers’ sentiment improved to minus 10 in December. It was also better than a median market forecast for a reading of minus 15.
The survey also showed the big non-manufacturers’ sentiment also rebounded to minus 5 compared to minus 12 in September which was more or less according ot experts’ predictions.
The fact that profits at big companies are coming down while also presenting a discouraging outlook because of uncertainties of a recovery, resulting in companies slowing down on spending, was reflected in the plans of big firms to slash their capital expenditure by 1.2 per cent during the current business year to March 2021.
The survey showed that the plans of cutting down on spending was a downgrade by the big companies for their previous plans of raising their capital spending by 1.4 per cent, as was evident in the September survey which was much more in comparison to the market forecasts for a 0.2 per cent slashing in spending by the companies.
This latest released data will be among the most important data that would be considered and debated by the BOJ when its governing body meets for a two-day rate review that will end on Friday. It is being widely expected that the Japanese central bank will stop short of expanding stimulus, but will contemplate extending a variety of measures and steps aimed at easing corporate funding constrains beyond their March deadlines.
In the second quarter, the Japanese economy saw its worst postwar contraction but has since rebounded in the July-September quarter because of higher domestic consumption and increased exports. But that recovery is expected to be modest because of third wave of Covid-19 infections, according to many analysts.
(Source:www.cnbc.com)
According to analysts, this is welcome sing sign for the country’s economy as it is till attempting ot stage a rebound after the novel coronavirus pandemic hit earlier in the year.
But because of a recent bout of resurgence of Covid-19 infections in the country, capital expenditure plans for the current fiscal year ending in March next year have been slashed companies as they bow view the resurgence of the infections as a sign that a recovery for the third largest economy of the world will be fragile and slow.
The Bank of Japan’s closely watched “tankan” survey showed that compared to a value of minus 27 in September, the headline index for big manufacturers’ sentiment improved to minus 10 in December. It was also better than a median market forecast for a reading of minus 15.
The survey also showed the big non-manufacturers’ sentiment also rebounded to minus 5 compared to minus 12 in September which was more or less according ot experts’ predictions.
The fact that profits at big companies are coming down while also presenting a discouraging outlook because of uncertainties of a recovery, resulting in companies slowing down on spending, was reflected in the plans of big firms to slash their capital expenditure by 1.2 per cent during the current business year to March 2021.
The survey showed that the plans of cutting down on spending was a downgrade by the big companies for their previous plans of raising their capital spending by 1.4 per cent, as was evident in the September survey which was much more in comparison to the market forecasts for a 0.2 per cent slashing in spending by the companies.
This latest released data will be among the most important data that would be considered and debated by the BOJ when its governing body meets for a two-day rate review that will end on Friday. It is being widely expected that the Japanese central bank will stop short of expanding stimulus, but will contemplate extending a variety of measures and steps aimed at easing corporate funding constrains beyond their March deadlines.
In the second quarter, the Japanese economy saw its worst postwar contraction but has since rebounded in the July-September quarter because of higher domestic consumption and increased exports. But that recovery is expected to be modest because of third wave of Covid-19 infections, according to many analysts.
(Source:www.cnbc.com)
