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Japan's Business Confidence Falls to Lowest Level in Over Two Years
Japan's business confidence in April-June quarter falls to its lowest level in two and a half years, mainly on the continued decline in stock prices and exports, the government said Wednesday in a survey report.
The Business Survey Index (BSI) sank to minus 38 from minus 31 recorded in the January-March quarter, down to its lowest point since minus 41 recorded for the October-December period of 1998, the Cabinet Office said.
It was also the third quarter in a row that the index was in negative territory.
Senior Cabinet Office economist Yoshihiko Senoo sounded more cautious than the previous quarter in assessing the survey result, saying that "sentiment among companies in Japan is likely to continue to deteriorate and moves ahead should be cautiously monitored."
The index had been expected to begin improving in April-June quarter three months ago, but such expectations were postponed to the current quarter, he said.
The BSI is projected to stand at minus 27 in the July-September period and minus 12 in the October-December quarter.
Senoo attributed the forecast to expectations among exporters for a recovery in the U.S. economy, but acknowledged the situation has worsened since the survey was conducted on June 25.
The quarterly survey was conducted on 4,501 companies capitalized at 100 million yen (810,000 U.S. dollars) or more with a response rate of 90.9 percent.
The BSI remained in negative territory for all the 28 industries for the second straight term in the reporting quarter, with that of manufacturers falling to minus 39 from minus 32 and of non-manufacturers to minus 36 from minus 30, according to the survey.
The index for individual firms' pretax profit prospects fell to minus 21 from minus 13 and is estimated to be minus 12 in the current quarter and minus nine in the following quarter, it said.
It also showed that the BSI for inventories rose to 27 as of the end of June from 22 three months earlier, reflecting an increase in the number of firms believing they have excess finished product inventories.
The index, however, is expected to fall to 17 for September and 12 for December.
The survey also found that capital investment is estimated to have decreased a seasonally adjusted 8.6 percent in the April-June period from a year earlier, following a 1.7 percent dip the preceding term, with manufacturers recording a 9.6 percent decline from a 0.8 percent gain the previous quarter.
Retailers and restaurants, real estate companies and electric machinery makers contributed the most in dragging down the estimated investment in the reporting quarter, Senoo said.
By half-year, estimated capital spending grew 4.6 percent in the January-June period over the same term last year, but is predicted to decrease 3 percent in the latter half of this year, the first downswing in a year.
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