In what figured to be the final push for Prime Minister Shinzo Abe to go ahead with raising the consumption tax to 8 percent in April, the Bank of Japan’s “tankan” report Tuesday showed a sharp increase in business sentiment among manufacturers.
Benefiting from a weaker yen induced by Abe’s ultra-loose fiscal policies dubbed “Abenomics,” the sentiment index for big manufacturers — companies capitalized at ¥1 billion or more — climbed to 12 in the three months through September compared with a score of 4 in June.
Abe had said that Tuesday’s tankan numbers, which are determined by subtracting the percentage of companies with bad business sentiment from companies with a positive outlook, would be one of the final factors considered in judging whether to go forward with the sales tax hike.
“We have confirmed that there are positive signs on all fronts,” including company profit outlook and their plans on business investment, Chief Cabinet Secretary Yoshihide Suga said after the BOJ released the tankan. “We will continue to promote Abenomics with confidence.”
It was the third consecutive quarter that an improvement was marked in sentiment among large manufacturers, and 12 is the highest score since the global financial crisis touched off by the “Lehman shock” in 2008.
The index for large nonmanufacturers also improved, rising to 14 from the previous quarter’s 12.
Among the industries with the strongest sentiment, automakers added 11 points from the last survey to reach 27.
Electronics makers climbed to 9 from minus 4. Sentiment among smaller manufacturers gained ground as well, with midsize companies turning in readings of 0 in September from minus 4 in June. Small companies added 5 points to recover to minus 9 from the previous minus 14.
Among the few indexes with subdued results, big companies’ investment plans for fiscal 2013 indicated a downturn. Manufacturers and nonmanufacturers alike lowered their predictions by 0.3 percentage point to 5.1 percent growth over last year.
The survey covered 10,548 firms between Aug. 27 and Sept. 30 and drew responses from 99.3 percent of them.
“The increase among major manufacturers was substantial, and improvements can also be seen among small and midsize companies,” Haruka Kazama, an economist at Mizuho Research Institute, told The Japan Times.
Kazama pointed out that improvement in the business environment for manufacturers, mostly due to the cheaper yen, has resulted in higher profits and other advantages in overseas markets.