Japan: Business confidence in the manufacturing sector steady in Q4; prospects worsen
According to the Bank of Japan’s quarterly Tankan business survey, sentiment among large manufacturers was steady at 19 in the fourth quarter of 2019, contrasting market expectations of a fall to 15. Confidence in non-manufacturing firms rose from 22 in Q3 to 24 in Q4. The Tankan business survey is calculated by subtracting the number of respondents who say economic conditions are improving from those who say they are deteriorating. A positive reading means optimists outnumber pessimists.
The forward-looking indicator for the next three months declined from 19 to 15, indicating firms expect business conditions to deteriorate slightly.
The survey also showed that large firms expect capital spending to increase 14.3% in the financial year to March 2019, above market expectations of a 12.7% increase.
Lastly, large manufacturers forecast that the Japanese yen will average 109.3 JPY per USD in the second half of the 2018 fiscal year, which ends in March 2019 (Q23forecast: 107.3 JPY per USD).