Japan small firms' mood hits 4-month low: survey

[TOKYO] Japanese small firms' business sentiment worsened to a four-month low in October, a private think tank survey showed, in a sign that rising import prices from a weak yen were offsetting the boost to corporate profits from slumping fuel costs.

Lifting the mood of Japanese businesses has been key to Prime Minister Shinzo Abe's stimulus strategy, including bold monetary easing, which aim to nudge companies and households into spending more instead of hoarding cash.

An index measuring small- and medium-sized companies'business sentiment fell 0.3 point from September to 48.7 in October, a survey by the Shoko Chukin Bank showed on Wednesday. "The drop ... suggests that economic activity is broadly flat," said Marcel Thieliant, Japan economist at Capital Economics.

While manufacturers' sentiment was unchanged from September, service-sector morale worsened for two straight months with some firms complaining of rising raw material costs, the survey showed.

The survey of 1,000 firms nationwide is one of the few indicators gauging monthly changes in sentiment among Japan's small and mid-size companies.

REUTERS