- Marcel Thieliant, Capital Economics
A survey conducted among Japan's large-scale factories showed a strong deterioration in the nation's manufacturing activity in the second quarter. However, a solid recovery was anticipated in the upcoming quarter. The Business Survey Index plunged from 2.4 in the March quarter to -6.0 in the reported period. A reading above zero signals optimism, while a negative reading indicates pessimism. Businesses surveyed evaluated domestic economic conditions as less favourable in the three months through June than in the previous quarter. Nevertheless, they predicted to see an amelioration in the following quarter. Employment conditions were also weaker this quarter, compared with the March quarter, but were predicted to weaken further in the following two quarters. Sales and ordinary profits were seen accelerating in the second half of fiscal 2015, but investment plans were expected to moderate sharply.
Earlier in the week, the data showed the world's third biggest economy grew an annualized 3.9%, compared with the 2.4% pace initially reported. Measured on a quarterly basis, the Japanese economy added 1%, compared with the initial estimate of a 0.6% increase. Strong private demand in residential and corporate spending were the main upside contributors.
© Dukascopy Bank SA