BOJ tankan seen showing manufacturers' mood strongest since mid-2015

BOJ tankan seen showing manufacturers' mood strongest since mid-2015

By Kaori Kaneko

TOKYO (Reuters) – Japanese manufacturers' business outlook likely improved for a second straight quarter in March to its strongest since mid-2015, a Reuters poll found on Friday, buoyed by a weak yen & a pickup in exports.

The Bank of Japan's quarterly tankan business sentiment survey will likely show the headline index for huge manufacturers' sentiment improved by four points to plus 14 in March from plus 10 in December, the poll of 19 economists found.

It would be the highest reading since the June 2015 survey when the index of huge manufacturers' mood was at plus 15.

The poll found the sentiment index for huge non-manufacturers would likely rise to plus 20 from plus 18 three months ago, improving for the first time in six quarters & hitting its highest level since March 2016 when it stood at plus 22.

But the outlook of both manufacturers' & non-manufacturers will likely worsen slightly in the short term as uncertainty over the Trump administration's trade policies & an unstable political situation in Europe invite companies to be cautious.

"We expect huge manufacturers' mood improved broadly, helped by export recovery & continued yen weakness," said Tsuyoshi Ueno, senior economist at NLI Research Institute.

"But the situation is extremely fluid, such as the prospects for President Trump's policy management & political risks in Europe."

Ueno added that prices were expected to rise in coming months, which would likely raise firms' worries approximately negative effects on consumers.

The poll found the sentiment of huge manufacturers will worsen to plus 13 in the coming three months & that of non-manufacturers will deteriorate to plus 18.

Big corporations were seen trimming their capital spending plans by 0.1 percent for the coming fiscal year from April, according to the poll.

"We expect firms' capital spending plan will be upgraded steadily after due to their ample cash flow on favourable profits," said Hideaki Kikuchi, an economist at Japan Research Institute.

"In addition, there is solid demand for investment to renew ageing facilities & increase efficiency."

The BOJ will release the tankan quarterly sentiment survey at 8:50 a.m. on April 3 (2350 GMT on April 2).

A separate Reuters' monthly poll, which tracks the BOJ's quarterly tankan, showed last week that confidence among Japanese manufacturers rose for a seventh straight month in March to a three-year high, while the service sector's mood was steady.

(Reporting by Kaori Kaneko; Editing by Eric Meijer)

Source: “Reuters”