RTTNews - Confidence in Japan's large manufacturers was up in the second quarter for the first time since Dec 2006, the Bank of Japan said on Wednesday in its quarterly Tankan Survey - but the gains were not as much as expected.
The diffusion index for big manufacturers posted a score of -48, which was up from the record low -58 in the previous quarter but shy of forecasts for -43. The outlook for the third quarter shows -30 versus expectations for -34 following -51 in the previous three months.
The big non-manufacturers index came in at -29 - also improving for the first time since December 2006 - with an outlook of -21. Small manufacturers were at -57 versus expectations for -53, while small non-manufacturers were at -44 compared to forecasts for -45.
Also, the data showed that big companies are expecting to cut capital expenditures by 9.4 percent - sharply worse than the 6.9 percent decline analysts had been expecting. Capex was down 6.6 percent in the first quarter.
Big manufacturers also expect pretax profit for the fiscal year to drop 39.5 percent, and see the dollar trading at 94.85 yen.
Also among the large manufacturers, domestic supply and demand conditions improved to -50 from -59, while overseas supply and demand jumped to -43 from -54. The change in input prices moved to -10 from -16, while output prices went to -24 from -25.
Manufacturing sales are forecast to fall 14 percent in FY 2009, while nonmanufacturing sales are seen lower by 8.7 percent. Manufacturing profits are expected to drop 39.5 percent, while nonmanufacturing profits are tipped to fall 8.6 percent.
The Tankan Survey queries firms on the prevailing business climate and is conducted by Japan's central bank to help determine monetary policy. Covering a wide range of business issues, the Tankan gives insight into the future direction of capital expenditure and pricing as well as the corporate outlook towards employment and the overall economy.
The Bank of Japan surveyed 10,441 companies, of which 98.5 percent responded. The indices are tallied by taking the percentage of firms experiencing favorable business conditions minus the percentage of those seeing unfavorable conditions.
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