Japan: TANKAN Results Show Growing Concerns Among Business

The Bank of Japan's Tankan Survey released today shows growing concerns among large manufacturers and non manufacturers, as can be seen in the first and second charts. The excess of optimists over pessimists among large manufacturers appraising current conditions declined to 11% from 19% in December. A slightly smaller decline was registered for non manufacturers--12% from 16%. In looking to the second quarter, the excess of optimists over pessimists among large manufacturers dropped to 7%. For non manufacturers, the excess of optimists dropped to 13%. One of the factors influencing the manufacturers, in particular, has been the steep rise in the yen over the past nine months, can be seen in the third chart.

Among the most closely watched items in the Tankan survey are the forecasts of capital spending.In the current survey, manufacturers plan to increase capital spending in the current fiscal year ending last month, March, 2008 by 9.5% and non manufacturers by 5.2%. For next fiscal year ending March 2009, however, both large manufacturers and non manufacturers are planning to cut capital spending, the manufacturers by 3.3% and the non manufacturers by 0.6%, as can be seen in the fourth and fifth charts.

Much more detail from the Tankan can be found in the Haver Database, JAPAN. Data are available for medium and small enterprises and for specific industries as well as sales and profit expectations.