Japan's Business Outlook Survey from the Ministry of Finance (MOF) registered further deterioration in the first quarter of 2009, ahead of the closely-watched Tankan survey of business conditions, to be released by the Bank of Japan April 1.

The index for large corporations - firms with capital of more than ¥1 billion - fell to -51.3 for the all industries category in the first quarter, down from -35.7 in Q4. The statistics were released Monday (Sunday night EDT).

Breaking down the numbers, large manufacturing corporations saw their business conditions index plummet to -66.0 in the first quarter from -44.5 in the final quarter of 2008, while the non-manufacturing index also descended sharply, to -42.6 compared to the prior reading of -30.5

The MOF survey has been in negative territory since the fourth quarter of 2007.

Today's report showed business conditions for medium-sized companies - those with capital of between ¥100 million and ¥1 billion - also report steep declines: all industries fell to -51.3 in Q1 from -33.3 in the previous quarter.

Small corporations saw the most pessimistic results. Sentiment in all industries from companies with ¥10 million to ¥100 million decreased from -40.7 to -52.9 in 2009's first quarter. The index for small manufacturers is at -72.4, deteriorating from the fourth quarter's -51.3 reading.

The Bank of Japan's own first quarter Tankan survey will be released April 1. The Tankan report for the fourth quarter indicated insecurity was rife among Japan's business leaders: the headline index for large manufacturers reported its most precipitous fall since 1974.

By Nick Say, nsay@economicnews.ca