BOJ Survey Likely to Show Worsening Business Sentiment

December 9, 2018

Tokyo--The Bank of Japan's "tankan" quarterly survey for December, due out on Friday, is expected to show a further deterioration of Japanese business sentiment amid trade tensions, according to private think tanks.

The headline diffusion index on large manufacturers' current business conditions is likely to fall to 17 from plus 19 in the September tankan, its fourth consecutive quarter of decline, according to the average forecast of the 12 think tanks.

The DI represents the percentage of companies reporting that their business conditions are good minus that of those saying the opposite.

Eleven of the think tanks projected a fall in the DI, while the remaining one predicted a flat reading.

"Negative impacts from a U.S.-China trade fight and a slowdown in the Chinse economy would be felt" in the December tankan, said an official at Sumitomo Mitsui Asset Management Co.

A series of natural disasters in Japan is also putting a damper on sentiment, the think tanks said.

According to the think tanks, the coming tankan is also expected to show a further decline in the DI toward March next year, to plus 15 on average.

In addition to the U.S.-China trade dispute, business managers are concerned about the possibility of escalating U.S. pressure on Japan as Tokyo and Washington begin new trade talks early next year, an official at the NLI Research Institute said.

The survey is likely to show a 12.5 pct increase in major companies' capital spending plans for fiscal 2018, which ends next March, a downward revision from the 13.4 pct growth shown in the September tankan, according to the average forecast of the think tanks. Jiji Press