MNI 5 THINGS: BOJ Sep Tankan: Sentiment Down, Capex Solid

--BOJ Sept Diffusion Index For Major Manufacturers +19 vs +21 In June

     TOKYO (MNI) - The Bank of Japan's quarterly Tankan business survey for

September, released Monday, showed business sentiment lower for the third

straight quarter, hit by increasing concerns over the global economy and rising

raw material costs.

     Looking ahead, sentiment among major companies is expected to be flat three

months ahead, although many sectors are expected to fall further on jitters over

protectionist U.S. trade policies. Labor shortages in Japan are also pushing up

costs, adding to supply constraints.

     On the plus side, business investment plans remain solid for fiscal 2018 as

many firms are seeking to ease production capacity constraints and firms are

absorbing high costs through increased productivity.

     The average dollar/yen exchange rate assumed by major manufacturers for

fiscal 2018 (beginning Apr 1) was Y107.40, compared with Y107.26 seen in the

June survey.

     The diffusion index is calculated by subtracting the percentage of

companies reporting deteriorating business conditions from the percentage of

those reporting an improvement. A positive figure indicates the majority of

firms see better business conditions.

     The key points from the survey:

     * The diffusion index for sentiment among major manufacturers posted the

3rd straight quarter-on-quarter drop, falling to +19 in September from +21 in

June, hit by higher energy and raw material costs as well as concerns over

global demand. The index was slightly weaker than the MNI survey median forecast

of +21. The index is projected to be unchanged at +19 in December.

     * The sentiment index for major non-manufacturers marked the first drop in

two quarters, falling to +22 in June from +24 in June, in light of sluggish

domestic demand. It was in line with the MNI survey median forecast for +22. The

index is projected unchanged at +22 three months ahead.

     * The September sentiment index for smaller manufactures was unchanged from

June at +14 (the MNI survey median forecast was +13). The index is expected to

slip to +11 in December. The sentiment index for smaller non-manufacturers stood

at +10 in September, up from +8 in June. The index is projected to slump to +5

in the next poll.

     * Business investment plans by major firms, the key to a pickup in domestic

demand, are projected to rise 13.4% on year in the current fiscal year, slightly

revised down from +13.6% seen in the June survey and below the MNI survey median

economist forecast for a 14.2% rise. Capex plans by smaller firms are expected

to fall 8.4% in fiscal 2018, revised up from -11.8% in June and weaker than the

MNI survey median forecast of -5.4%.

     * The levels of capital investment plans by both large and smaller firms in

the current fiscal year are close to their historical averages.

--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hiroshi.inoue@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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