MNI SURVEY: BOJ March Tankan Survey To Show Weaker Corp Views

Business sentiment is expected to have weakened from three months ago, economists predict, as the Bank of Japan's March Tankan survey will show the impact of higher energy costs and pandemic curbs on companies.

Smaller firms are said to face more pressure from rising costs, and service industries are hard hit by the government’s quasi-emergency measures to curb the spread of Covid-19 infections, a trend noted in the latest BOJ policy review, see: MNI STATE OF PLAY: BOJ Kuroda: No Policy Change If CPI Hits 2%.

Economists expect the diffusion index (DI) for sentiment among major manufacturers to worsen to +12 from +18 in December.

See: MNI SURVEY: BOJ March Tankan Business Sentiment Forecasts.

The median forecast for the DI for major non-manufacturers is +5 in March, from +9. The sentiment index for small manufacturers is projected to fall to -6 from -1. The sentiment for small non-manufacturers is forecast to fall to -9 from -4. Capex plans by smaller firms likely fell 10.6% from a year earlier, according to the survey. Capex plans by smaller firms will be gradually revised up from the beginning of new fiscal year.

The BOJ will release the outcome of its Tankan quarterly business survey conducted from early February to March 31 at 0850 JST on April 1, Friday (2350 GMT on March 31, Thursday).