Japan business mood hits six-year high as 'Abenomics' takes hold

Mon Dec 16, 2013 4:26am EST
 
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By Leika Kihara and Tetsushi Kajimoto

TOKYO (Reuters) - Japanese business confidence improved over the three months to December to its highest level in six years, a central bank survey showed, suggesting Prime Minister Shinzo Abe's "Abenomics" stimulus policies are gaining broader traction across the economy.

The Bank of Japan's quarterly "tankan" survey showed sentiment brightened not just for big firms but also for smaller companies, which had been slower to reap the benefits of a recovering economy.

Small manufacturers' sentiment hit a six-year high and the small non-manufacturers' index turned positive, which means optimists outnumbered pessimists, for the first time since 1992.

The tankan reinforces the BOJ's view that the economy is recovering moderately under and likely allowing it to hold off on expanding stimulus in coming months, analysts said.

"The economy is moving in line with the BOJ's forecasts, which means the central bank will keep monetary policy steady at least next week and in January," said Junko Nishioka, chief Japan economist at RBS Securities.

The headline index for big manufacturers' sentiment improved 4 points from the previous quarter to plus 16, the tankan showed on Monday, slightly above a median market forecast of plus 15.

It was the fourth straight quarter of improvement and the highest level since December 2007, as companies benefited from robust domestic demand and a weak yen that gives their goods a competitive advantage overseas.

Service-sector mood also improved as consumers rushed to beat a sales tax hike next April. The big non-manufacturers' index was up 6 points to plus 20, better than a median forecast of plus 16 and the highest level since December 2007.   Continued...

 
People look at the prices of tickets outside a ticket shop at the Ginza shopping district in Tokyo October 31, 2013. REUTERS/Yuya Shino