TOKYO – Business sentiment among Japan's automakers and other big manufacturers has improved slightly, according to the latest quarterly survey by the Japanese central bank.
The Bank of Japan's "tankan" survey for December showed its measure of business confidence rose to 10 from 6 in the October survey. It was the first such improvement in six quarters.
Japan's economy, the world's third largest, grew at a 1.3 percent annual pace in July-September, the third straight quarter of expansion but below most economists' forecasts.
Overall, the economy is still growing much more slowly than was hoped given the massive monetary easing of the past few years. The key policy interest rate is negative but corporate investment in factories and equipment remains anemic.
The tankan index measures the percentage of responding companies that say business conditions are better minus the percentage that say they are worse. So an index level of 10 means slightly more companies are optimistic than pessimistic. Companies can also respond that conditions are unchanged.
The December survey showed the outlook for services companies and other non-manufacturing firms flat at 18. Looking ahead, the outlook index for large manufacturing firms fell to 8, and the outlook for large non-manufacturers fell to 16, reflecting unease over what 2017 will bring, given uncertainties over U.S. President-elect Donald Trump's future policies on trade, Britain's expected exit from the eurozone and weaker growth in developing countries.
The survey's measures of the mood among smaller companies improved slightly for December, but the outlook for the coming March survey was still negative for both manufacturers and other companies.
Expectations for sales, profits and investment for both large and small companies weakened.
The yen is trading at about 115 yen to the U.S. dollar from near 100 yen before the U.S. presidential election. That is a boon for exporters and companies with operations overseas. Profits earned in dollars from those offshore businesses are larger in yen terms when brought back to Japan.
"While the improvement of the sentiment was broad-based in terms of size and sector of firms, the decline of the outlook toward March was also broad-based," Masamichi Adachi of JP Morgan said in a commentary.
The BOJ survey covered 10,791 large, medium and small companies, of which 1,084 were large manufacturers and 1,038 were large non-manufacturers. It was conducted from Nov. 14-Dec. 13.
This story has been corrected to show Japan is the world's third-largest economy.