Central Bank: Japanese business confidence recovers

• Source: Global Times
• [10:43 July 01 2009]
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By Zhu Shanshan

Japanese business confidence among major manufacturers has improved for the first time in two and half years, according to Tankan survey conducted by the Japanese central bank.

The sentiment index, which calculates the percentage of companies that think business conditions are good, minus those that think they are bad, rose to minus 48 in June from a record low of minus 58 in March.

The increase was the biggest since June 2002 and it also was the first improvement since December 2006, giving hope to the Japanese economy.

The survey also showed that the confidence index for major non-manufacturers increased to minus 29 from minus 31three months ago.

But the profit outlook, which had been expected to fall 19.7 percent, has been downgraded to a 39.5 drop in pre-tax earnings.

The world’s second-largest economy contracted an annualized pace of 14.2 percent in the first quarter of 2009 which was the worst performance Japan ever had.

The Japanese government has introduced a series of stimulus packages which includes cash handouts for households and incentives to buy fuel-efficient cars, hoping they could jump-start the economy.

While hopes are mounting that Asia’s largest economy has come through the worst of the downturn, Japan’s unemployment rate released Tuesday hit a five-year-high of 5.2 percent in May.