• Kyodo News


Business sentiment among large firms deteriorated in the January-March quarter from the previous three months, despite steady improvements in the manufacturing sector, amid continued weak domestic demand, a government survey showed Thursday.

The index of business conditions at companies capitalized at ¥1 billion or more came to minus 2.4, compared with minus 1.9 in the three months through December, according to the survey conducted by the Finance Ministry and the Cabinet Office.

This is the second quarter running that the index has deteriorated, although business sentiment among large manufacturers stayed positive.

The large manufacturers’ index for the first quarter of 2010 stood at plus 4.3, falling from plus 13.2 in the previous quarter and plus 15.5 before that.

But the index for big nonmanufacturers stayed in negative territory for the 10th consecutive quarter, coming to minus 6.3, an improvement on the minus 10.7 recorded in the previous quarter.

Nonmanufacturing firms such as retailers are finding it difficult to boost earnings amid deflation and sliding household incomes, while manufacturers’ deteriorating sentiment in part reflects worries about higher raw materials costs, Finance Ministry officials said.

The officials said none of the surveyed manufacturers reported that sentiment was affected by the massive vehicle recall at Toyota Motor Corp.

The index is calculated every three months by subtracting the percentage of firms reporting worsening business conditions from that of firms reporting improvements.

Large firms expect continued weakness in the April-June quarter, with the forward-looking index reading minus 1.6.

The forecast is brighter for July to September, at plus 6.8.

The index for large manufacturers reads plus 1.9 for the April-June quarter and plus 10.3 for the subsequent quarter.

For nonmanufacturers, it stands at minus 3.7 for the April-June period and plus 4.8 the following quarter.

The index for employment conditions at large companies in all industries was minus 4.2 for the January-March period.

The survey, conducted Feb. 25, covered 11,408 companies.

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