FILE PHOTO: Cranes are pictured against the sunset at construction site in the Toyosu district in Tokyo, February 12, 2015. REUTERS/Thomas Peter/File Photo
November 10, 2017
By Tetsushi Kajimoto and Izumi Nakagawa
TOKYO (Reuters) – Confidence among Japanese manufacturers slipped in November from a decade high seen the previous month, a Reuters poll showed, but it remained strong, underscoring the economy’s continuing expansion.
The Reuters Tankan, which tracks the Bank of Japan’s closely-watched tankan quarterly survey, also found service-sector firms’ sentiment edging up, a further sign of broadening recovery.
The sentiment indexes for manufacturers and service-sector firms are expected to hold largely steady over the next three months.
The latest survey results bolster the argument that Japan’s economy, the world’s third largest, is gathering momentum from a brisk export performance and firmer domestic demand.
“The economy is in a moderate recovery trend, but capital spending lacks some strength due to uncertainty over the outlook on the global economy,” a manager of a machinery maker wrote in the survey, in which companies respond anonymously.
The poll of 547 large- and mid-sized companies, in which 255 firms responded, was conducted Oct. 26 to Nov. 7.
The sentiment index for manufacturers fell to 27 from a decade-high of 31 in October, weighed on by producers of industrial materials such as oil, steel, nonferrous metals and chemicals.
Service-sector sentiment rose one point to 31, led by real estate/construction firms that benefit from the BOJ’s easy money.
Retailers were more muted, a concern for the health of private consumption that constitutes some 60 percent of the economy.
“The operating rate of buildings is performing well. Marked increase in activity is seen among the wealthy who seek residences worth 300 million yen to 1 billion yen ($8.75 million). Demand for real estate among ordinary people is slow,” a real estate firm said.
The Bank of Japan’s last tankan showed big manufacturers were the most optimistic for the business outlook in a decade.
Japan’s economy expanded at an annualized 2.5 percent in the second quarter as consumer and corporate spending picked up, with steady growth likely to be sustained in coming quarters.
BOJ policymakers hope a sustained economic recovery will boost wages and consumer spending, but analysts expect inflation to remain below the central bank’s 2 percent target for some time.
The central bank left monetary policy steady last week while a board newcomer called for a clearer commitment to ramp up stimulus if necessary, potentially complicating future BOJ efforts to dial back its massive monetary stimulus.
The Reuters Tankan indexes are calculated by subtracting the percentage of pessimistic respondents from optimistic ones. A positive figure means optimists outnumber pessimists.
(Reporting by Tetsushi Kajimoto and Izumi Nakagawa; Editing by Eric Meijer)
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