Large firms’ sentiment up in quarter

Kyodo

The business sentiment of large firms improved for the first time in a year in the three months through September, signaling strength in the construction sector due to the March 2011 earthquake and tsunami, a government survey showed Tuesday.

The confidence index covering companies capitalized at ¥1 billion or more stood at 2.2, up from minus 3.1 for the previous quarter, also helped by briskness among auto and mobile phone manufacturers, according to the joint survey by the Cabinet Office and the Finance Ministry.

The result was weaker, however, than the projected rise to 8.8 in the previous sentiment survey. Sentiment is expected to continue to improve, with the index advancing to 5.4 in the October-December period before slowing down to 5.2 in the January-March quarter, according to the survey.

Sentiment at manufacturers recovered to 2.5 from minus 5.7, boosted by the robust sales of environmentally friendly vehicles and smartphones. The recovery more than offset slumps in other sectors hit by weaker exports as a result of the economic downturn in Europe due to the eurozone sovereign debt crisis.

The mood among nonmanufacturers rose to 2.0 from minus 1.6 on strong domestic demand associated with reconstruction work in the northeast following the natural disasters of last year. The construction industry led overall confidence, with its index surging to 20.2 from minus 27.9.

The readings were calculated by subtracting the percentage of firms reporting deteriorations from those seeing improvements.