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Confidence falls among Japanese manufacturers
Source: Agencies |
December 16, 2011, Friday
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CONFIDENCE at major Japanese manufacturers fell over the last quarter, as the export-reliant country battled a strong yen and an increasingly precarious global economy, a key central bank survey showed yesterday.
In the Bank of Japan's "tankan" survey of business sentiment, the main index for large manufacturers fell to minus 4 in the first deterioration in two quarters. Three months ago, it stood at 2, as companies rebounded from the devastating March earthquake and tsunami in northeastern Japan.
The figure represents the percentage of companies saying business conditions are good minus those saying conditions are unfavorable, with 100 representing the best mood and minus 100 the worst.
The tankan "underscored the faltering Japanese economy, which rebounded impressively from the March disaster until early summer but lost its steam from then mainly due to the external factors," Masamichi Adachi, senior economist at JPMorgan Securities Japan, told clients.
The economy expanded at an annualized rate of 5.6 percent during the July-September period in a robust recovery from the earthquake and tsunami. But that pace has already slowed considerably in the face of global headwinds, economists say.
Large manufacturers certainly don't expect to feel better anytime soon. The central bank forecasts the index to fall to minus 5 over the next three months.
Japan has been battling a strong yen, which has hit multiple historic highs this year against the dollar. Amid Europe's debt problems and economic uncertainty in the United States, global investors have looked to the Japanese currency as a relatively safe haven. But Japan relies on exports to drive growth and offset an aging and shrinking population.
The yen's appreciation has hit companies such as Toyota Motor Corp and Sony Corp hard. When the yen climbs, it reduces the value of exporters' overseas profits when repatriated to Japan.
That has pushed companies to shift more production overseas, prompting worries about a hollowing out of Japanese industry.
In the Bank of Japan's "tankan" survey of business sentiment, the main index for large manufacturers fell to minus 4 in the first deterioration in two quarters. Three months ago, it stood at 2, as companies rebounded from the devastating March earthquake and tsunami in northeastern Japan.
The figure represents the percentage of companies saying business conditions are good minus those saying conditions are unfavorable, with 100 representing the best mood and minus 100 the worst.
The tankan "underscored the faltering Japanese economy, which rebounded impressively from the March disaster until early summer but lost its steam from then mainly due to the external factors," Masamichi Adachi, senior economist at JPMorgan Securities Japan, told clients.
The economy expanded at an annualized rate of 5.6 percent during the July-September period in a robust recovery from the earthquake and tsunami. But that pace has already slowed considerably in the face of global headwinds, economists say.
Large manufacturers certainly don't expect to feel better anytime soon. The central bank forecasts the index to fall to minus 5 over the next three months.
Japan has been battling a strong yen, which has hit multiple historic highs this year against the dollar. Amid Europe's debt problems and economic uncertainty in the United States, global investors have looked to the Japanese currency as a relatively safe haven. But Japan relies on exports to drive growth and offset an aging and shrinking population.
The yen's appreciation has hit companies such as Toyota Motor Corp and Sony Corp hard. When the yen climbs, it reduces the value of exporters' overseas profits when repatriated to Japan.
That has pushed companies to shift more production overseas, prompting worries about a hollowing out of Japanese industry.
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