Japan: Business confidence remains low on the back of strong yen
April 2, 2012
According to the quarterly TANKAN business survey elaborated by the Bank of Japan, sentiment among large manufacturers remained unchanged at minus 4 points in the first quarter, which was below market expectations that had business sentiment edging up to minus 1 point. The index is calculated by subtracting the percentage of firms saying business conditions are bad from those saying they are good, whereby a negative number means pessimists outnumber optimists. Meanwhile, business confidence in the non-manufacturing industry continued to rise, inching up from 4 points in the fourth quarter of 2011 to 5 points in the first quarter this year. Large enterprises in the manufacturing sector anticipate conditions will remain subdued next quarter, although the forward-looking forecast index improved from minus 5 points in the fourth quarter to minus 3 points. Sentiment among major manufacturers remains pessimistic, as they expect that the yen will strengthen throughout this year, thereby jeopardizing exports and profits. Big manufacturers see the Japanese yen trading at an average of 78.14 per USD by the end of fiscal year 2012.