Bank of Japan survey shows uptick in business outlook

Japanese manufacturers are feeling slightly more upbeat than they were late last year, according to a quarterly survey by the Bank of Japan released Monday.

The central bank's "tankan" report put sentiment among large manufacturers at 12, up from 10 in December. Medium-sized and small companies also were more optimistic.

The survey's findings fell slightly below economists' forecasts. But they were seen as a sign that improved exports are underpinning growth in the world's No. 3 economy as China's economy stabilizes.

Marcel Thieliant of Capital Economics said, "The survey suggests that growth will remain strong for now."

"Admittedly, firms are forecasting a renewed deterioration in the current quarter, but this is not unusual when current circumstances are favorable," he said.

A separate, monthly survey of purchasing managers, Nikkei Japan Manufacturing, also showed improved conditions. The latest reading of 52.4 was down slightly from March's reading of 53.3 on a scale where 50 marks the cutoff between expansion and contraction.

The growth is likely sustainable in the near term, said Paul Smith, a senior economist at HIS Markit, supported by demand for capital goods, such as factory machinery.

The BOJ's survey showed large manufacturers intend to increase spending on factories and equipment by 0.6 percent in this fiscal year, which began April 1. Overall, companies plan to cut such capital spending by 1.3 percent.

But capital outlays often increase during the year, Thieliant noted.

The survey of 10,799 companies was conducted from late February to the end of March. Readings are based on the difference between those surveyed who say conditions are good and those who say they are unfavorable.