Japan's Large Manufacturers' Sentiment Sags in Challenge for Abe – Businessweek

Confidence of Japan’s large manufacturers declined in the fourth quarter as a recession offset a boost from a weaker yen, underlining the economic challenges facing Prime Minister Shinzo Abe after his election win.

The Tankan’s big manufacturer index slipped to 12 in December from 13 in September, the Bank of Japan said today, lower than the median estimate of 13 in a Bloomberg News survey of economists. The index is forecast to drop to 9 in March.

A recession and an election victory that puts pressure on Abe to deliver on promised growth-boosting reforms are raising the stakes for his efforts to revive the world’s third-biggest economy. Burdened by debt, the government is counting on companies to increase investment and wages to fuel a recovery.

“Businesses are still not fully convinced of a recovery,” Takuji Aida, an economist at Societe Generale SA, said before today’s report. “Corporate confidence must be restored so increased investment and wages can pull the nation out of deflation completely.”

Sentiment (JNTSNMFG) among large non-manufacturers rose to 16 from 13. Across all industries, big companies plan to boost capital expenditure by 8.9 percent this fiscal year through March, compared with plans for an 8.6 percent increase in the September survey.

Large manufacturers based their plans on the assumption the yen would average 103.36 per dollar in the current fiscal year. The Tankan survey of 10,312 businesses was conducted from Nov. 12 to Dec. 12.

To contact the reporter on this story: Toru Fujioka in Tokyo at tfujioka1@bloomberg.net

To contact the editors responsible for this story: Brett Miller at bmiller30@bloomberg.net James Mayger, Arran Scott

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