Weakness in the Japanese economy and the slowdown in Asia are chipping away at the nation’s business confidence, with the latest survey from the central bank showing sentiment among large manufacturers worsening.
The Tankan index for large manufacturers fell to 12 in September from 15 in June, the Bank of Japan said Thursday, lower than the median estimate of 13 in a Bloomberg survey of economists. The index is forecast to drop to 10 in December. While Tankan index for large non-manufacturer Sept.at 25 from 23 before with estimation at 20.
There’s growing concern that Japan’s economy may have contracted in the quarter that’s just ended, which would tip the nation into its second recession since Japanese Prime Minister Shinzo Abe took office in 2012. Large companies that have benefited from the weak yen and rising profits under Abe have yet to make a significant commitment to expanding domestic investment.
Both Abe and Bank of Japan Governor Haruhiko Kuroda have said investment and wage growth is needed to keep the economy out of deflation and on growth path.
Optimism is subdued as China’s slowdown and Japan’s stagnant consumer spending cloud the outlook for businesses in Japan, Kazuhiko Ogata, an economist at Credit Agricole SA in Tokyo.