TOKYO (MNI) – Business confidence among large Japanese
manufacturers improved in March for the fourth consecutive quarter, as
exports and production continued to rise on the recovering global
economy, according to the Bank of Japan’s latest quarterly March Tankan
corporate survey released on Thursday.

The Tankan survey headline index — showing current business
sentiment among large manufacturers — improved to -14 in March from -25
in December (revised down from -24 due to a change in sampling), but the
index remained in negative territory for the seventh consecutive
quarter.

The benchmark March figure came in weaker than the consensus call
of -12, with economist forecasts ranging from -8 to -17.

The March level for the headline index was the highest since -3 in
March 2008, but remained well below the +5 seen in June 2008 just before
the global financial crisis began.

The pace of improvement in business sentiment generally
accelerated, thanks to a stronger-than-expected economic recovery in
emerging economies.

The 11-point gain in the current survey was bigger than the 6-point
rise forecast by respondents in the December survey.

Going forward, the pace of recovery is expected to be slow amid
concerns about persistent deflation and uncertainty over a recovery in
private demand.

The headline sentiment index is expected to improve by another 6
points to -8 in the next survey in June, according to respondents’
forecast in the March survey.

The latest Tankan continued to show there is a gap in improvement
between export-oriented manufacturers and other sectors dependent on
domestic demand.

Business confidence among major non-manufacturers also improved for
the fourth straight quarter, though it rose only slightly to -14 from
-21 three months earlier. The index is expected to improve further to
-10 in June.

The March figure for large non-manufacturers was slightly better
than most analysts expected. The median of forecasts by economists was
-17, with estimates ranging from -12 to -20.

Sentiment among smaller manufacturers — led by motor vehicles,
general-purpose machinery, non-ferrous metals and business oriented
machinery — improved for the third quarter in a row.

But both smaller manufacturers and non-manufacturers continue to
expect their sentiment to drop in three months’ time, as small
businesses are not benefitting much from the global economic recovery.

tokyo@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4833 **

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