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TOKYO (MNI) - The Bank of Japan's quarterly Tankan survey for September is
expected to show sentiment among many business sectors improved from three
months ago, thanks to firmer global demand and resilient domestic consumption.
The BOJ will release the outcome of its business survey at 0850 JST on
Monday, Oct. 2 (2350 GMT Sunday).
Major manufacturers are being supported by a gradual upturn in overseas
demand and a pickup in domestic consumer spending, although they remain cautious
about the outlook amid geopolitical risks posed by North Korea's nuclear arms
The MNI survey median forecast for sentiment among major manufacturers is
+18, up slightly from +17 in the June survey and which would be the fourth
straight quarterly rise. The forecasts by 11 economists ranged from +14 to +20.
The diffusion index is calculated by subtracting the percentage of
companies reporting deteriorating business conditions from those reporting an
improvement. A positive figure indicates a majority of firms see better business
The MNI survey median forecast for major non-manufacturers' sentiment in
September is +23, unchanged from June. The forecasts ranged from +21 to +25.
The sentiment index for small manufacturers is projected to be +8 in
September (forecast range: +5 to +10), improving from +7 in June. The sentiment
index for small non-manufacturers is forecast to be unchanged at +7 (range: +4
Mizuho Research Institute senior economist Haruka Ono said in a report that
business sentiment in many industries was being supported by a recovery in
foreign economies and solid domestic private consumption.
Recent data support this conclusion.
The real export index calculated by the BOJ rose 1.7% in July after falling
0.9% in June. And the BOJ's supply-side Consumption Activity Index rose a real,
seasonally adjusted 0.3% m/m in July the second straight month-on-month rise
after rising 0.1% in June. The index in the April-June period edged up 1.0% on
quarter after a 0.8% gain in January-March.
But the outlook remains uncertain. Ono predicted that business sentiment
would fall three months ahead, weighed down by lingering concerns over global
political and economic conditions.
Capital investment plans among major firms are expected to show a 8.4%
increase on year for fiscal 2017, revised up slightly from +8.0% in the June
Tankan, according to the MNI survey median.
Mitsubishi UFJ Morgan Stanley economists said in a report that an upward
revision to major firms' capital investment plans this fiscal year would be
limited because capex plans seen in the June Tankan were much higher than the
past average level.
The median economist forecast for capex plans among smaller firms is -15.0%
for fiscal 2017, up from -20.6% in the previous survey. Plans by smaller firms
are usually revised up gradually toward the end of the fiscal year.
Combined capital investment by non-financial Japanese companies rose 1.5%
on year in the April-June quarter, the third straight quarter of increase after
rising 4.5% in January-March, a survey by the Ministry of Finance showed.
BOJ economists are monitoring the Tankan survey results to see whether
inflation expectations among businesses and households improved for the second
On Oct. 3, the BOJ will release the quarterly corporate inflation outlook
that is part of the Tankan survey. It will be followed on Oct. 6 by the release
of the bank's quarterly survey of consumer sentiment and inflation outlook.
BOJ board members will digest these and other indicators, as well as
reports from the bank's branch managers to be released on Oct. 10, ahead of
their key policy meeting on October 30-31, when they will also discuss their
medium-term economic projections and the risks to those projections.
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