BOJ tankan seen showing improved business mood, capex

Wed Dec 11, 2013 12:22am EST
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By Leika Kihara

TOKYO (Reuters) - A central bank survey out next week is expected to show Japanese business confidence improved in the three months to December as robust fiscal and household spending made up for soft exports -- thanks to Premier Shinzo Abe's stimulus policies.

The Bank of Japan's quarterly "tankan" survey is also expected to show companies maintaining upbeat capital expenditure plans, according to a Reuters poll, reflecting their optimism over the outlook as the recovery gathers momentum.

Such readings will underscore the Bank of Japan's view that the economy is recovering moderately and allow it to hold off on expanding stimulus in coming months, although some analysts warn of economic uncertainties next year.

"The tankan will be in line with the BOJ's upbeat projections and offer no reason to ease policy," said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute.

"The economy will be booming until the sales tax hike in April. After that, there's a lot of uncertainty, including whether the strength in capital expenditure will be sustained and whether exports will pick up."

The central bank's quarterly tankan survey, due on Monday, is expected to show the headline index for big manufacturers' sentiment improved three points from the previous quarter to plus 15, according to a Reuters poll of 21 economists.

That would be the fourth straight quarter of positive readings, which means optimists outnumbered pessimists, supporting the view that the economy is steadily emerging from a temporary soft patch in July-September.

The Reuters poll found that service-sector mood also improved as consumers rush to beat the sales tax hike, with the big non-manufacturers' index seen up two points at plus 16.   Continued...

Pedestrians walk past the Bank of Japan building in Tokyo October 31, 2013. REUTERS/Yuya Shino