Receive $80 Grab vouchers valid for use on all Grab services except GrabHitch and GrabShuttle when you subscribe to BT All-Digital at only $0.99*/month.
Find out more at btsub.sg/promo
[TOKYO] Japanese business sentiment turned positive in July-September and companies stuck to upbeat spending plans, a government survey showed, offering some relief for policymakers worried about a hit from slowing Chinese growth and ensuing market turmoil.
The poll, the first comprehensive business confidence survey for the current quarter, followed a recent run of gloomy data, including a survey showing the service sector's mood worsening in August. "Big manufacturers appear a bit cautious about the outlook, probably due to uncertainty over China. But it's not as if they are all gloomy since US demand remains strong," said Takeshi Minami, chief economist at Norinchukin Research Institute. "Capital expenditure plans remain fairly strong, so I don't think we need to be too pessimistic about the economy," he said.
An index gauging sentiment at large manufacturers stood at plus 11.0 in July-September, rebounding from minus 6.0 in the previous quarter, a joint survey by the Finance Ministry and a research arm of the Cabinet Office showed on Friday.
Companies plan to raise capital expenditure by 6.1 per cent over the business year that started in April, revised up from the previous poll's 5.9 per cent gain, the survey showed.
But the index gauging big manufacturers' business conditions in October-December fell slightly, a sign some of them are feeling the pinch from weakening demand in China.
Higher capital spending and wages are critical to the success of Prime Minister Shinzo Abe's reflationary policies known as "Abenomics", which aim to prod companies into spending more instead of sitting on huge cash piles.
After having pressured companies into raising wages last year, the government hopes to nudge them into boosting capital expenditure in a rare dialogue with private firms in October. "We need to strengthen Japan's domestic demand to offset any negative impact from overseas economies," Economics Minister Akira Amari told reporters on Friday. "From that perspective, we want to hold a public-private sector dialogue and one area we would look at is how companies are using their cash reserves," he said.
Japan's economy shrank in April-June and growth is expected to rebound only modestly in the current quarter as sluggish Asian demand hurts exports, keeping policymakers under pressure to offer further fiscal or monetary steps to rev up growth.
The survey's index measures the percentage of firms that expect the business environment to improve from the previous quarter minus the percentage that expect it to worsen.