BoJ survey to show up trend: economists

The Bank of Japan's quarterly survey of business sentiment, better known as the Tankan, is expected to show further improvement, backed by export-led economic recovery, economists said.
The central bank is scheduled to release the result of the March Tankan survey on April 1.
Solid gains in corporate profits are improving the prospects for salaries and stimulating consumer spending, which in turn should support a sustained improvement in business sentiment, the economists said.
The headline sentiment index for large manufacturers, the driving force behind the current upturn, is forecast on average to come in at plus 10 in the latest survey, up from plus 7 in the December Tankan.
In the December Tankan, surveyed firms had forecast that the index would come in at plus 6 in the March survey.
"The surveyed firms had predicted in the December survey a deterioration in business sentiment towards the March survey due to caution over the appreciation of the yen," said Ryutaro Kono, chief economist at BNP Paribas.
"But thanks to the sustained growth in the global economy and a peak in the appreciation of the yen in February, it seems that firms are getting more confident about the sustainability of the ongoing positive developments."
The yen reached a three-year high of 105.16 yen to the dollar in early February but has since lost some ground, weakening to 112 yen in early March.
The economists also predicted a modest improvement in business confidence among large non-manufacturers due to emerging signs of a recovery in consumer spending and optimism that Japan is crawling out of prolonged deflation.
The trade ministry said Friday that Japan's total sales at both wholesale and retail levels rose 1.1 percent in February from a year earlier, marking a third consecutive monthly increase.
As for a faint sign of easing deflationary pressures, year-on-year declines in Japan's nation-wide land prices narrowed at the start of the year for the first time in six years. For large non-manufacturers, the headline Tankan sentiment index is forecast to come in at plus 3 on average in the March survey, up from zero in the December Tankan.
In the December Tankan, all surveyed firms forecast a 3.7 percent increase on average in spending on upgrading factories and offices in the year to March 2004.