Japan's business confidence index hits 6-year high

Business confidence among major Japanese manufacturers in the July-September period rose to a nearly six-year high thanks to recovery in exports on the back of the weaker yen, the Bank of Japan (BOJ) said Tuesday. The central bank's quarterly survey showed the business sentiment index among big makers in the world's third-largest economy improved to plus 12, compared with plus 4 in the previous June survey, the highest reading since December 2007 and marked the third straight quarter of rise. The index represents the percentage of companies which are positive about their business minus the percentage of those who gave negative replies. Thus, a positive number means optimists outnumber pessimists. The central bank's "tankan," which means short-term economic outlook, is Japan's most closely watched index of business confidence. The improvement of sentiment comes amid recovering exports on the back of the weak yen and Prime Minister Shinzo Abe's ambitious economic policies called "Abenomics," which focus on easing monetary policy, massive government spending, and growth strategy. Confidence among large retailers, banks, real estate companies, and other non-manufacturers gained 2 points to plus 14, also the highest reading since December 2007. The survey also showed that big firms in both manufacturing and non-manufacturing sectors plan to boost capital spending by 5.1 percent in fiscal 2013 through March 31 from the previous year, down from the 5.5 percent gain in the June survey. Looking ahead, large manufacturers expect their sentiment index to worsen to plus 11 in the next survey in December, while large non-manufacturers predict the index to remain unchanged at 14. According to the survey, big manufacturers anticipated that the US dollar will average JPY 94.45 in fiscal 2013 through next March, compared with their previous projection in the March survey of JPY 91.20. The weak yen benefits exporters, such as automakers and industrial machinery makers, as it boosts export profitability by making Japanese products cheaper overseas. The latest survey was conducted between August 27 and September 30, covering 10,548 companies, of which 99.3 percent responded.