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TOKYO (Reuters) – Business confidence among Japan's big manufacturers for a second quarter in June, a Bank of Japan survey showed, with the outlook clouded by U.S. trade protectionism and rising input costs.
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The quarterly BOJ tankan's headline index of more 21 undershot the median estimate of more 22 in a Reuters poll of analysts, and is expected to stay flat over the next three months.
Still, the survey also showed that big firms plan to raise their capital spending by 13.6 percent in the financial year starting April 2018, handily beating economists' median estimate of a 9.3 percent gain.
"Manufacturers' sentiment is leveling off while capital expenditure holds firm. I'm watching how fears of trade protectionism can affect corporate capex planning from now on, "said Masaki Kuwahara, a senior economist at Nomura Securities.
SOLID CAPEX
Big manufacturers plan to increase capital expenditure by 17.9 percent this fiscal year, the fastest gain for June, since 2015, the tankan showed.
Large non-manufacturers plan to raise capex by 11.2 percent, making it the fastest increase for the first time since 1990 during the peak of the bubble economy.
Economists expect capital expenditure will be supported by the need to upgrade production capacity and invest in labor-saving equipment to cope with labor shortages, and an infrastructure boom ahead of the Tokyo Olympic Games in 2020.
A Bank of Japan Note that the big firms are investing in the capex plans, and they could be revised down as the year progresses.
A private survey showed on Monday that an increase in the rate of decline in the United States and major economies.
WORRIES OVER PROTECTIONISM, YEN
The central bank will scrutinize the tankan results at its rate. analyze factors behind subdued inflation.
Policymakers and Japanese firms also worry that trade friction and potential gains in the safe-haven could undermine export-led growth.
The last tanker is shown to be worthy of this price, which is 107.66 seen this year. The dollar stood at around JPY 111 in the early Monday trade.
"Some manufacturers are worried about the rising yen, and this hurt their feeling. Companies may be worried about risk aversion, "said Hiroshi Miyazaki, senior economist at Mitsubishi UFJ's Morgan Stanley Securities.
"The tankan shows the economy remains on solid footing, but it is not enough to allow the BOJ to head for the exit."
Large non-manufacturers' sentiment stood at plus 24 in June, slightly above median forecast of more 23, up one point from the previous quarter. It was seen worsening to 21 in September.
The tankan's sentiment indexes are derived by subtracting the number of those who say they are good. A positive reading means optimists outnumber pessimists.
Japan's economy is expected to rebound in the second quarter of a contraction in the first quarter of the long-term growth streak since the 1980s bubble economy.
Reporting by Tetsushi Kajimoto; Editing by Eric Meijer
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