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Private-sector economists expect Monday’s Bank of Japan “tankan” quarterly survey to show a decline in business confidence among major manufacturers for the first time in two years and three months, according to a Kyodo News survey conducted Thursday.

The 28 economists surveyed forecast on average a zero diffusion index reading of major makers’ confidence, down from 10 logged in the preceding tankan poll in December.

The tankan figures are likely to highlight the rapid shrinkage in the business confidence of managers at large manufacturing firms, which have taken a thrashing from the U.S. economic slowdown and flagging share prices in Japan and overseas. , the poll shows. DI figures at major makers, especially at electronics firms that have seen falls in both exports and demand for information technology products, are likely to show sharp drops from the previous tankan readings. , according to the poll. A DI figure is computed by subtracting the percentage of firms reporting unfavorable business conditions from that of favorable responses.

The trend of generally deteriorating business confidence at large makers will be echoed in another set of DI figures to be reported by small and midsize companies. , it shows. The BOJ has said that the December DI readings show that the economy is at a standstill; the DI figure of 10 for large makers in December was identical to that for September.

Monday’s tankan results “will corroborate suggestions that the economy has entered a recessionary phase,” said Hideo Kumano, senior researcher at the Dai-Ichi Life Research Institute. The economists expect a further deterioration of the DI figure for major manufacturers, forecasting an average of minus 2 for June.

Large makers will cut capital outlays on new equipment and factories by an average 4.2 percent in fiscal 2001, which begins Sunday, a sharp turnaround from the 7.6 percent rise for fiscal 2000 that the firms reported they would fund at the time of the December poll, the survey shows.

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