Japanese business confidence improves amid weaker yen
Japan's Prime Minister Shinzo Abe speaks during a press conference at the prime minister's official residence in Tokyo, Wednesday, June 26, 2013. (AP / Shizuo Kambayashi)
Published Sunday, June 30, 2013 9:51PM EDT
Last Updated Sunday, June 30, 2013 11:41PM EDT
TOKYO -- Business sentiment among major Japanese manufacturers turned positive for the first time in nearly two years, a signal that companies are reacting positively to the weaker yen and Prime Minister Shinzo Abe's policies to revive the stagnant economy.
The Bank of Japan's closely-watched quarterly "tankan" survey for June showed that the index for major manufacturers rose to positive 4 from negative 8 in March. The survey released Monday was the first to be higher than zero since September 2011. A positive reading means more companies are optimistic than pessimistic.
The index for major non-manufacturers rose to 12 from 6 in the last survey.
The "tankan" also showed that major manufacturers plan to increase capital spending by 6.7 per cent in the current fiscal year, while non-manufacturers plan to increase investment by 4.9 per cent.
The improved confidence comes amid a weakening yen, which boosts overseas income for Japan's key exporters, and a series of aggressive economic policies -- monetary easing and boosting public workers spending -- implemented by Abe since he took office in late December.
The upbeat numbers come after Japan said Friday that industrial production had risen 2 per cent in May from April, the fourth monthly increase, while core consumer prices had stopped falling for the first time in seven months. For years, Japan has been dogged by deflation, or falling prices, which can drag on economic growth, and the Bank of Japan has set a goal of 2 per cent inflation within the next two years.
Japan's economy grew at a 4.1 per cent annual pace in the first quarter.
The stock market has risen sharply this year, but share prices have fallen back some over the last month amid skepticism about Abe's plans to enact structural reforms in the economy and a belief that prices rose too far too fast.