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(CEP News) - Confidence amongst Japan's business leaders were slightly more optimistic than expected in the second quarter of 2008, according to the results of the Bank of Japan's closely-watched Tankan survey.
The headline large manufacturer's index fell to 5 in the second quarter from a previous reading of 11 and below the consensus forecast of 3. The outlook amongst large manufacturers was slightly upbeat, coming in at a reading of 4, above the 2 economists had expected but well below the previous quarter's reading of 15. The non-manufacturing index fell to a reading of 10, but was above what economists had expected. The previous reading was 12. The outlook amongst non-manufacturing firms fell to 8 from a previous reading of 13 but was higher than the consensus forecast of 7. The Tankan all-industries Capex index, which measures capital expenditures by all Japanese industries except for the financial sector, showed large manufacturers and non-manufacturers plan to increase business investment by 2.4% in fiscal 2008. Economists had expected that figure to come in at +2.0%. In the previous quarter, manufacturers and non-manufacturers had expected to decrease spending by 1.6% The indexes are tallied by taking the percentage of firms experiencing favourable business conditions minus the percentage of those seeing unfavourable conditions. "June's Tankan survey confirmed that Japanese business conditions are deteriorating, but not as far as most had feared," Julian Jessop, chief international economist at Capital Economics, wrote in a research note. "Unlike previous downturns, the detail shows little sign of the excess capacity or labour hoarding that might lead to a recession," Jessop continued. "Indeed, the employment components show that labour shortages are still the dominant concern. By Steve Secyk,
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