Corporate confidence in Japan rose to an 18-month high in September, but the small margin of improvement from June suggested a fragile recovery was losing steam.
The Bank of Japan's (BOJ) quarterly "tankan" survey of business sentiment, released today, showed executives remained intent on cutting capital spending and expected only a slight improvement in the business climate by December.
The tankan's widely watched "diffusion index" of large manufacturers climbed for a second straight quarter although it remained in negative territory at -14, its strongest reading since March 2001 but up just four points from June. It has been stuck in negative territory for seven straight quarters.
Mr Heizo Takenaka, Japan's economics minister and newly appointed bank regulator, said the tankan showed various risk factors in Japan's recovery. top government spokesman Mr Yasuo Fukuda said it was clear conditions were tougher.
The tankan survey, covering 8,500 companies and taken from August 28th to September 30th, showed large firms plan to cut capital spending by 6.2 per cent in the fiscal year that started in April.
Rising exports and strong profits helped Japan's economy post annualised growth of 2.6 per cent in the April-June quarter, the first expansion in five quarters, but a broad-based rebound has remained elusive.