Tuesday, 1 October 2024 08:41 WIB | MARKET UPDATE |JAPANBOJ
Japanese big manufacturers’ business sentiment was steady in the three months to September, a closely watched central bank survey showed on Tuesday, a sign the economy continues to recover despite weakness in global growth.
Big non-manufacturers’ mood improved, the Bank of Japan’s (BOJ) “tankan” survey showed, underscoring the strength of domestic demand.
The tankan will be among key factors the BOJ will scrutinise in setting monetary policy and releasing fresh growth and inflation forecasts at its next meeting on Oct. 30-31.
“Despite the yen’s rebound since mid-July, big manufacturers’ business sentiment remains unexpectedly solid,” said Takeshi Minami, chief economist at Norinchukin Research Institute. “Overall results are positive, considering various risk factors such as a stronger yen, pressure to raise wages and downside risks to the global economy.”
The headline index for big manufacturers’ confidence stood at +13 in September against +13 in June and in line with a median market forecast.
ig companies expect to increase capital spending by 10.6% in the fiscal year to March 2025, the tankan showed, smaller than a median forecast for a 11.9% gain and down from an 11.1% increase three months earlier.
The BOJ ended negative interest rates in March and raised its short-term policy rate to 0.25% in July on the view Japan was making steady progress towards durably achieving its 2% inflation target.
BOJ Governor Kazuo Ueda has said the central bank will continue to raise rates if companies keep hiking prices and wages due to optimism over the outlook, and help keep inflation durably around its 2% target.
“The tankan showed that business sentiment has not been affected by the July rate hike,” Norinchukin’s Minami said. “Given that the financial markets remain unstable, another rate hike is unlikely in October, but it’s possible in December depending on consumption data,” he added.
Japan’s economy expanded an annualised 2.9% in the second quarter as steady wage hikes underpinned consumer spending.
Source : Reuters