• Kyodo


Business sentiment at large companies improved in the first quarter of 2013 thanks to a weaker yen and higher stock prices, but most remain wary of increasing capital expenditures, the government said Tuesday.

The confidence index covering firms capitalized at ¥1 billion or more came to 1.0 in the January-March quarter, up from minus 5.5 in the October-December period and the first improvement in two quarters, a joint survey by the Finance Ministry and the Cabinet Office said.

The index is calculated by subtracting the percentage of companies reporting deteriorating business conditions from those observing improvements.

Nonmanufacturers’ sentiment rose to 4.0 from minus 2.9 amid growing hopes that Prime Minister Shinzo Abe’s economic policies, centering on drastic monetary easing and massive fiscal spending, could help shore up the economy.

Sentiment at manufacturers, however, remained negative, though it picked up to minus 4.6 from minus 10.3, underscoring that many firms have yet to believe that despite recent rallies in share prices, the broader economy has bounced back.

As skepticism about a sharp economic recovery grows, large companies in all industries plan to decrease capital spending by 6.5 percent in fiscal 2013 from the previous year, while they are likely to increase investment by 3.3 percent for the current fiscal year through March 31, the government survey showed.

Looking ahead, large firms expect business conditions to improve over the next six months.

Wholesale prices down

Wholesale prices fell 0.1 percent in February from a year earlier for the 11th straight monthly decline, due mainly to a continued drop in the prices of steel and information and communications equipment, the Bank of Japan said Tuesday.

The size of the fall, however, slightly narrowed compared with a revised 0.3 percent fall in January, reflecting a rise in prices of material-related goods such as petroleum and coal products as well as nonferrous metals amid the yen’s drop, a BOJ official said.

The index of corporate goods prices stood at 101.0 against the 2010 base of 100, the central bank said in a preliminary report.

By product, iron and steel fell 8.2 percent from a year earlier due mainly to cheap material costs. But the central bank official said that prices may recover down the road as price competition is expected to ease amid the yen’s fall against other major currencies.

Prices of information and communications equipment, including digital cameras and televisions, decreased 6.9 percent on fierce sales competition, also weighing down on the country’s wholesale prices.

But prices of petroleum and coal products were up 8.7 percent, while those of nonferrous metals rose 6.7 percent. Prices of electric power, gas and water climbed 3.8 percent.

In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.