[TOKYO] Big Japanese manufacturers grew less optimistic in October-December and they see conditions worsening further in the following quarter, a government survey showed on Wednesday, suggesting that the economy is slow to recover from a recession.
The joint quarterly poll by the Ministry of Finance and the Cabinet Office also indicates that the central bank's key tankan survey due Dec 15 may show little improvement in business sentiment in the final three months of this year.
The poll showed that companies are growing less positive on business investment, not a good sign for Prime Minister Shinzo Abe's pro-growth policies dubbed "Abenomics" ahead of a Dec 14 election which he looks set to win comfortably.
The business survey index (BSI) of sentiment at large manufacturers stood at 8.1 in October-December, compared with 12.7 in the prior three months. The index is expected to slide further to 6.1 in January-March. "The data reflects scepticism about a domestic demand-led recovery amid lingering effects of April's tax hike and sluggish wages," said Koichi Fujishiro, an economist at Dai-ichi Life Research Institute. "The BOJ's tankan may not turn out so poor though as it was taken later than this survey, likely reflecting more positive effects of recent yen weakness, higher share prices and falling oil prices." Japan's economy slipped into a recession in the third quarter after a sales tax hike in April clobbered consumption and chilled broader activity.
The latest survey follows the Reuters Tankan, which strongly correlates with the BOJ's tankan. The Reuters poll showed an uneven recovery after April's tax hike, with manufacturers' mood sliding and the service-sector mood bouncing.
A timid result in the BOJ survey, which has been forecast to stay largely flat in the fourth quarter, could cast further doubt on the bank's rosy economic forecasts. Falling oil prices are expected to force the BOJ to cut its inflation forecasts, making its 2 per cent goal even harder to meet.
The BSI survey showed that companies plan to raise capital spending by 4.9 per cent in the current business year to March 2015, against a 5.7 per cent gain seen in the prior poll.
The quarterly survey showed sentiment among big non-manufacturers also slipping to 3.4 from 10.2 in July-September, bringing the overall mood among big firms to 5.0.
The service-sector mood is seen rising to 4.5 in January-March, and overall big business sentiment is seen unchanged.