Business sentiment improved only marginally in the June Tankan. Enterprises have become much more optimistic on their profit outlook. This might explain why they are willing to step up investment. Nevertheless, most of them are still reporting substantial overcapacity and overstaffing. Financial conditions have become less tight since the previous survey.
Overall business sentiment only slightly improved according to the June Tankan, as the slight decline in actual business conditions in the manufacturing sector was compensated by a modest improvement in non-manufacturing. Conditions could slightly worsen in the coming months, in particular in the latter.
In manufacturing, sentiment was in particular supported by the motor industry, where activity has been supported by purchase incentives for green cars. Car manufacturers expect these conditions to last in the coming months. This looks too optimistic as the scheme is to expire this month.
Construction is the second engine for growth for the economy. Conditions indeed improved in this sector, although some weakening was expected in the months ahead. However, the iron and steel industry, an important producer for building materials, reported that production remained badly oriented. A substantial improvement is expected in the coming months.
Enterprises have become much more optimistic on their profit outlook. For the current fiscal year (April 2012-March 2013), they expect them to rise by 3.4% (8.3 percentage point higher than in the March Tankan). This might explain why they are willing to step up investment. These should grow by 4% in FY2012, a gain of 4.5 pp from the previous survey.
Nevertheless, most companies are still reporting substantial over- capacity and overstaffing. In the manufacturing sector, the balance of opinion on excess capacity was 11 percentage points and on excessive employment 9 percentage points, virtually unchanged from the previous survey. These conditions are likely to prevail in the coming months.
Financial conditions have become less tight since the previous survey. Only the majority of small enterprises reported that conditions have remained rather tight. All industries reported an improvement in the lending attitudes of financial institutions and lower interest rates. These favourable conditions are expected to remain in the coming months.
Overall business sentiment only slightly improved according to the June Tankan, as the slight decline in actual business conditions in the manufacturing sector was compensated by a modest improvement in non-manufacturing. Conditions could slightly worsen in the coming months, in particular in the latter.
In manufacturing, sentiment was in particular supported by the motor industry, where activity has been supported by purchase incentives for green cars. Car manufacturers expect these conditions to last in the coming months. This looks too optimistic as the scheme is to expire this month.
Construction is the second engine for growth for the economy. Conditions indeed improved in this sector, although some weakening was expected in the months ahead. However, the iron and steel industry, an important producer for building materials, reported that production remained badly oriented. A substantial improvement is expected in the coming months.
Enterprises have become much more optimistic on their profit outlook. For the current fiscal year (April 2012-March 2013), they expect them to rise by 3.4% (8.3 percentage point higher than in the March Tankan). This might explain why they are willing to step up investment. These should grow by 4% in FY2012, a gain of 4.5 pp from the previous survey.
Nevertheless, most companies are still reporting substantial over- capacity and overstaffing. In the manufacturing sector, the balance of opinion on excess capacity was 11 percentage points and on excessive employment 9 percentage points, virtually unchanged from the previous survey. These conditions are likely to prevail in the coming months.
Financial conditions have become less tight since the previous survey. Only the majority of small enterprises reported that conditions have remained rather tight. All industries reported an improvement in the lending attitudes of financial institutions and lower interest rates. These favourable conditions are expected to remain in the coming months.
