Japan's longest postwar economic expansion, which started in February 2002, appears headed toward a critical stage. The Bank of Japan's Tankan survey shows that business sentiment among companies has deteriorated because of the yen's steep rise against the dollar, stock price declines and high oil prices.
The survey, carried out from Feb. 26 to March 31, shows the diffusion index of business sentiment among major manufacturers, a key survey component, at 11 for the three months through March, down from 19 for the previous survey in December. This marks a decline for the second consecutive quarter and the lowest since December 2003 when the comparable figure was 7.
The business sentiment index among major nonmanufacturers dropped by four points to 12 — a deterioration for the third consecutive quarter. The corresponding index for midsize and small manufacturers fell by eight points to minus 6.