— Japan MOF: Q2 Major Firm Sentiment -3.1 Pt Vs Q1 -2.7 Pt
— Japan MOF: Q2 Sentiment Projected at +1.3 Pt In Q1 Poll
— Japan MOF: Major Firm Sentiment Seen Q3 +8.8 Pt, Q4 +8.8 Pt
— Japan MOF: FY12 All Firm Capex Plans +8.4% Vs -0.3% In Q1 Poll
— Japan MOF: FY12 All Firm Current Profit +6.5% Vs +6.7% In Q1 Poll
TOKYO (MNI) – Business sentiment in Japan unexpectedly dropped in
the second quarter from the previous three months, hit by concerns about
global growth amid the European debt crisis and the recent safe-haven
buying of the yen, a quarterly government survey showed on Monday.
But sentiment, at least among large firms, is expected to see a
major turnaround in the coming quarters, even though western Japanese
cities face a possible power supply shortage in the summer.
The business sentiment diffusion index for major Japanese firms
slipped to -3.1 points in the June quarter from -2.7 points in the
previous quarter, according to a survey by the Ministry of Finance.
In the previous survey released in March, the index for the second
quarter of 2012 was forecast to improve to +1.3 points.
Amid heightened concerns about the spread of the debt crisis in
Europe, the euro on June 1 touched $1.2288, the lowest since June 2010,
while hitting a nine-year low of Y95.60.
European Union leaders agreed over the weekend to extend a loan of
up to E100 billion to Spain to help the country recapitalize its banking
sector. Spanish authorities are expected to present a formal request
early this week.
The MOF index is computed by subtracting the percentage of
companies reporting deteriorating business conditions from the
percentage of those reporting an improvement. A positive figure
indicates the majority of firms see butter business conditions.
The latest survey also showed that major firms’ sentiment is
expected to rebound to +8.8 points in the third quarter of 2012 and stay
at +8.8 points in the fourth quarter.
The survey showed that Japanese firms forecast a 8.4% rise in
combined capital spending in fiscal 2012, a reversal from their previous
projection for a 0.3% dip. It is expected to be led by investment in
automobiles and auto parts, chemical, retail, transportation and postal
services.
For fiscal 2012, manufacturers are planning a 9.8% increase in
combined business investment, up from the earlier forecast for a 2.7%
drop, while non-manufacturers are projecting 7.5% growth, compared with
the 1.3% rise seen in the March poll.
The survey showed firms’ current profits will rise 6.5% in fiscal
2012, down marginally from a 6.7% rise forecast in the previous survey .
Government subsides for buying greener cars and strong demand for
smartphones are expected to support profits at carmakers and
communications equipment makers.
Manufactures are expecting a 5.7% rise in combined current
earnings, down from a 8.6% rise in the previous forecast, while
non-manufacturers are forecasting a 6.9% rise in profits, up from a 6.0%
growth in the previous poll.
The Finance Ministry and the Cabinet Office conducted the joint
survey on May. 15, covering 15,985 companies capitalized at Y10 million
or over, of which 12,535 replied.
tokyo@marketnews.com
** MNI Tokyo Newsroom: 81-3-5403-4835 **
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