- Hiroaki Muto, senior economist at Sumitomo Mitsui Asset Management
The Bank of Japan's Tankan survey revealed that large manufacturers appeared to be more upbeat than expected, with the gauge reaching the highest level since March 2014, before a sales tax hike took effect. The data offered a sigh of relief to policy makers, who try to keep the recovery intact without deploying additional stimulus measures. The central bank's quarterly Tankan survey of more than 11,000 Japanese companies showed the key index looking at the assessment of economic conditions among large manufacturers rose to plus 15 in the June survey, compared with plus 12 in the March poll. The indicator came in better than a forecast of 12. Big companies plan to increase capital expenditure at the fastest pace in a decade, the data showed. Japan's large manufacturers expect capex for the 2015-16 fiscal year will surge 9.3%, compared with economists prediction of 5.2% growth. If companies do in fact increase capital expenditure at the expected pace, it will be the biggest rise since fiscal 2006, the BOJ said. However, small firms anticipate capex to decline 15.7% over the same period, although that came in better than a forecast for a 16.3% plunge.
In addition to that, the mood among big service-sector firms improved by 4 points to plus 23, beating market forecasts and rising for three straight quarters to reach a level last seen in March 2014.
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