December 7, 2018 / 9:13 AM / 8 days ago

BOJ tankan to show big manufacturers' mood down for fourth straight quarter

TOKYO (Reuters) - Japanese big manufacturers’ business confidence likely worsened for a fourth straight quarter in the three months to December, a Reuters poll showed on Friday, hit by uncertainties over the global economy and the China-U.S. trade conflict.

FILE PHOTO: A Japanese flag flutters atop the Bank of Japan building under construction in Tokyo, Japan, September 21, 2017. REUTERS/Toru Hanai

The Bank of Japan’s quarterly tankan business sentiment survey is projected to show the headline index for big manufacturers’ confidence fell to plus 17 in December from plus 19 three months ago, the poll of 15 economists showed.

The sentiment index for big non-manufacturers eased to plus 21 in December, slightly down from plus 22 seen three month ago, the poll found.

“Concerns over the global economic deceleration stemming from China’s economic slowdown and Sino-U.S. trade friction are spreading,” said Asuka Sakamoto, economist at Mizuho Research Institute.

Big manufacturers’ business confidence is seen worsening in the coming quarter to plus 16 and non-manufacturers’ sentiment is likely to deteriorate to plus 20, the Reuters poll found.

Japanese firms are becoming more pessimistic about the country’s economic prospects amid a fall in household spending and a drop in real wages, another Reuters poll and data on Friday showed, adding to concerns about the strength of the economy.

Big companies are expected to raise their capital spending plans for this fiscal year by 12.7 percent, down from 13.4 percent in the previous tankan survey.

Uncertainty over the economy likely prompted companies to revise down their plans for capital spending, Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities, said.

“But labour shortage remains the driver for non-manufacturers’ increasing capital spending,” he said.

The Bank of Japan will issue its tankan survey at 8:50 a.m. Japan time on Friday Dec. 14. (2350 GMT on Dec. 13).

Separately, Reuters’ monthly Tankan, which tracks the BOJ’s quarterly survey, showed confidence among Japanese manufacturers worsened for a second straight month in December and is seen slipping further.

CORE MACHINERY ORDERS

Japan’s core machinery orders are expected to show 10.5 percent growth in October from the previous month, the poll showed, rebounding from an 18.3 percent drop in September.

Compared with a year earlier, core orders, a highly volatile data series regarded as an indicator of capital expenditure, likely rose 5.9 percent in October following a 7.0 percent fall the previous month.

“External demand is weak but we expect domestic demand for streamlining and labour-saving, as well as upgrading ageing equipment, will support machinery orders,” said Yosuke Yasui, senior economist at Japan Research Institute.

The Cabinet Office will announce the machinery orders data at 8:50 a.m. on Wednesday Dec. 12 (2350 GMT on Dec. 11).

Editing by Jacqueline Wong

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