RTTNews - Pessimism about the economy among Japan's big manufacturers lessened notably in the second quarter of the year from the first three months, a closely watched survey revealed Monday.
The business confidence index for large manufacturing companies rose to minus 13.2 in the second quarter from a record low of minus 66 in the first quarter, according to the latest business outlook survey by the Ministry of Finance. That was the biggest increase since the survey started in 2004.
At the same time, the gauge for non-manufacturers' confidence stood at minus 27.8, up from previous quarter's minus 42.6. Hence, the index for all industrial confidence improved to minus 22.4 from minus 51.3.
It is expected that recent improvements in production and exports backed business mood in the second quarter. Increase in the business confidence also strengthened expectations that the Bank of Japan's Tankan survey, due July 1, would show an improvement in corporate sentiment from its lowest level on record.
Japan's manufacturers of chemicals, electronics and cars are reaping benefits from China's 4 trillion yuan government spending as it boosted demand for Japanese products. In April, industrial output grew 5.9% month-on-month and exports rose 1.9%. Annually, the pace of decline in exports eased to 39.1% in April from 45.5% in March.
Given the improvements in some leading indicators, the Bank of Japan and the government had raised their economic assessment. On June 17, the government had said while the economy is in a difficult situation, signs of a pick up are seen in some areas. It had also said exports are showing signs of recovery, while industrial production is picking up.
In the first quarter, the world's second biggest economy had contracted a record 14.2% annually. In its latest forecasts, the World Bank said Monday that the Japanese economy is likely to shrink by 6.8% in 2009 and then to recover with 1% growth in 2010. Growth is expected to pick up to 2% in 2011.
On the same day, a report released by the Japanese Ministry of Economy, Trade and Industry showed that the services sector in Japan showed a resurgence in activity in April. The tertiary industry activity index rose 2.2% month-over-month in April following an upwardly revised 2.8% decline in the previous month. The increase was close to economists' expectation for a 2.3% growth.
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