BOJ tankan to show firms' gloom eased in December quarter

TOKYO: Japan's big manufacturers became less gloomy in the December quarter compared with the previous three months as a recovery in exports boosted business confidence in the world's third largest economy, a Reuters poll showed on Friday.

The Bank of Japan's quarterly tankan business sentiment survey is expected to show the headline index for big manufacturers' confidence stood at minus 15 in December from minus 27 in September, the poll of 18 economists showed.

That would mark the index's second quarterly rise after hitting an 11-year low in the June quarter when the coronavirus-hit economy suffered its biggest slump on record.

The sentiment index for big non-manufacturers is also expected to have improved to minus 6 in the three months to December from minus 12 in the previous quarter, the poll showed.

"Exports to China and the United States are recovering, which supported manufacturers' sentiment," said Takeshi Minami, chief economist at Norinchukin Research Institute.

"But rising coronavirus cases have increased caution, which may have weighed on the recovery pace of business sentiment."

Big manufacturers' business confidence will likely pick up to minus 11 in the coming quarter, the poll found.

Meanwhile, non-manufacturers' business sentiment is expected to worsen to minus 7 as the services sector continues to be hit by people's reluctance to go out for fear of catching the coronavirus.

Economists expected big companies to cut a capital spending plan by 0.1pc for this fiscal year to March 2021 in the survey, having forecast a 1.4pc rise in the September survey.

Trade data on Wednesday is expected to show a 0.5pc increase in exports in November from a year earlier, the first rise since November 2018, and a 10.5pc year-on-year fall in imports last month.

The trade surplus was expected to narrow to 529.8 billion yen ($5.09 billion) as a result from a revised 871.7 billion in October, the poll showed.

Inflation data on Friday would likely show the core consumer prices index saw its biggest year-on-year fall in over a decade in November, weighed down by weak energy prices and a government campaign to boost domestic travel with discounts.

The core consumer price index (CPI), which includes oil products but excludes volatile fresh food prices, likely fell 0.9pc in November from a year earlier, according to the Reuters poll.

The Bank of Japan meanwhile was expected to keep its policy interest rate at minus 0.1pc and the 10-year Japanese government bond yield target at around 0pc when it holds a policy meeting on Dec. 17-18, the poll showed.