BOJ's tankan set to show big manufacturers' mood improving

By Kaori Kaneko

TOKYO (Reuters) - A measure of business confidence among big Japanese manufacturers is expected to hit its highest in more than a decade next week, a Reuters poll showed on Friday, buoyed by robust demand from overseas and upbeat corporate profits.

The poll also found that service-sector sentiment held steady on solid domestic demand and growth in the number of foreign visitors to Japan, although labour shortages could weigh on the sector's spirits.

The Bank of Japan's (BOJ) quarterly tankan business sentiment survey is set to show the headline index for big manufacturers' sentiment rose by 2 points to plus 24 in December, the poll of 17 economists found.

 

It would be a fifth straight quarterly improvement and the strongest reading since December 2006 when the index was at 25.

The index of big non-manufacturers' sentiment probably stood at 23, unchanged from the September survey, the poll found.

"Corporations retain upbeat profits thanks to economic recovery both in Japan and overseas and a weak yen," said Takeshi Minami, chief economist at Norinchukin Research Institute.

"But labour shortages and higher personnel costs may make corporations cautious going foward."

Economists say that chemicals, steel, electric machinery and production machinery are among sectors expected to show upbeat business sentiment.

For non-manufacturers, areas such as construction and real estate are supported by the 2020 Tokyo Olympic Games.

Economists forecast big corporations will increase their capital spending plans for the current fiscal year to March 2018 by 7.5 percent, a tad down from the 7.7 percent seen in the September survey.

Both big manufacturers and non-manufacturers forecast business conditions would worsen slightly in the next three months, the poll found.

The BOJ will release its tankan survey results at 8:50 a.m. on December 15 (2350 GMT on December 14).

The Reuters Tankan, a separate monthly survey that closely tracks the BOJ's tankan survey, showed on Thursday that confidence among Japanese manufacturers held firm in December and service-sector sentiment rose for a second straight month.

OCTOBER MACHINERY ORDERS SEEN RISING Japan will release core machinery orders for October on December 13, which are likely to show a 3.0 percent rise from the previous month, the poll found.

Core orders, regarded as a leading but highly volatile data series, tumbled 8.1 percent in September, the fastest fall in more than two years.

The core orders are seen likely to fall 2.8 percent in October from a year earlier.

The Bank of Japan will announce its corporate goods price index (CGPI) on Tuesday. It measures the prices companies charge each other for goods and services, rising an annual 3.3 percent in November.

(Reporting by Kaori Kaneko; Editing by Eric Meijer)