TOKYO, June 14 (Reuters) – Big Japanese manufacturers grew more optimistic about the business environment in the April-June quarter in a sign corporate sentiment is weathering a rising yen and market turmoil stemming from Europe’s debt crisis.
Companies also sharply raised their capital expenditure plans for the fiscal year to March 2011 in a sign that corporate appetite to spend is gradually picking up.
“Sentiment is gradually improving both for underlying conditions and the outlook,” said Takeshi Minami, chief economist for Norinchukin Research Institute.
“The euro’s decline triggered by the Greek debt crisis doesn’t seem to have had much impact, at least for now.”
The business survey index (BSI) of sentiment at large manufacturers rose to plus 10.0 in April-June from plus 4.3 in the previous quarter, a joint survey by the Ministry of Finance and the Cabinet Office’s Economic and Social Research Institute showed on Monday. [JPBUSC=ECI]
Large manufacturers expect their sentiment index to improve to plus 13.8 in July-September, compared with plus 10.3 in the previous survey.
Companies also see capital spending in the year to March 2011 rising 9.2 percent from the previous year, a sharp improvement from a 5.5 percent drop forecast in the previous survey.
The improvement bodes well for new Prime Minister Naoto Kan, who plans to lay out plans to boost Japan’s potential growth as well as a medium- and long-term target to fix the country’s tattered finances.
The Bank of Japan is expected to announce details of a new loan scheme aimed at redirecting money to industries with growth potential after a policy meeting ending on Tuesday. [ID:nTOE65D004]
The BSI measures the percentage of firms that expect the business environment to improve from the previous quarter minus the percentage that expect it to worsen.
The survey was conducted in May, when the euro EUR= tumbled, the yen JPY= jumped and global stock markets fell sharply as Greece’s debt crisis fanned fears of contagion to other European countries and the euro-zone banking system.
Japanese business sentiment has been improving as exports and industrial output recovers due to strong demand from Asia.
Economists forecast robust exports to Asia and other emerging economies will keep supporting Japan’s recovery from its worst postwar recession, but growth may slow later this year as gains in consumption could moderate due to a lacklustre jobs market.