Friday, October 1, 2004 3:53:49 AM
http://www.afxpress.com
||||| ||||| ||||| ||||| 2004-10-01 04:53:49 ROUNDUP - BoJ's Sept Tankan shows upturn in sentiment, but warns slowdown TOKYO (AFX-ASIA) - The Bank of Japan's Tankan quarterly survey showed business confidence among large manufacturers rising to a new 13-year high as base material producers benefited from surging prices of crude oil and commodity products, economists said
Reflecting the continued upturn in business confidence, Japanese firms have also become more pro-active in their business plans, boosting capital investment as well as their forecasts for sales and profits for the year to March 2005, according to the closely watched survey
But the Tankan survey also reflected a slowdown in the pace of improvement in business sentiment, as the headline diffusion index for large manufacturers showed only a 4-point improvement in the September survey, compared with a 10-point rise in June
More importantly, the downturn in the IT cycle, as well as soaring crude oil prices and uncertainties over the Chinese and US economies cast doubt over the sustainability of the pace of recovery in Japan
The Tankan's headline diffusion index measuring sentiment at Japan's large manufacturers rose to plus 26 -- the highest level since the May 1991 survey when the index stood at plus 33 -- from plus 22 in June. The September result was also the sixth straight quarterly improvement
In the June Tankan survey, large manufacturers forecast the diffusion index would come in at plus 21 in September
The September figure also beat the most optimistic market expectations, as economists had expected the sentiment index for large manufacturers to come in at an average of plus 23, with forecasts ranging from plus 21 to plus 25
The Tankan survey covers the short-term outlook of local companies for the economy in general as well as for their own sales, profits, capital spending and employment and other areas of business. The results are expressed as diffusion indices -- positive numbers mean more companies are bullish than bearish, while negative numbers mean the opposite
"The headline figure for the sentiment DI (diffusion index) of large manufacturers showed a much stronger than expected improvement, led by base material producers, which are benefiting from surging delivery prices of their products as they pass soaring prices of crude oil and base material onto processors," said Junichi Makino, senior economist at Daiwa Institute of Research
The sentiment diffusion index of large base material producers jumped to plus 25 in the September survey, up from 18 in the June poll, while the index of large processors showed only a 3 point improvement to 27 in September
Amid soaring delivery prices, large base material producers now forecast a 26.4 pct rise in current profit for the year to March 2005, much higher than the 13.4 pct growth seen by large processors for the same period
"But thanks to the continued profit growth reflecting the lingering positive impact of past restructuring, leading processors showed the continued improvement in confidence despite the slowdown in demand for IT products and the downturn of the silicon cycle," Makino said
The Tankan also confirmed further improvement in business confidence across most sectors
The sentiment index of large non-manufacturers rallied to plus 11 -- the highest level since the February 1992 survey when the index stood at 20 -- against plus 9 in the June survey and compared with a forecast of plus 11. The September figure was the fourth straight quarterly rise
Small-sized manufacturers were at plus 5 -- the highest since the November 1991 survey when the index was at 8 -- compared with plus 2 in the June survey and a forecast of plus 2. That was the 10th straight quarterly improvement
The sentiment index of small non-manufacturers stood at minus 17 -- its best showing since the June 1997 survey when the index was at minus 11 -- compared with minus 18 in the June survey and a forecast of minus 18. September's was the sixth straight quarterly rise
The latest Tankan also found that non-financial firms now plan to boost combined capital expenditure by 3.5 pct in the year to March 2005 from the previous fiscal year, compared with a forecast of a 2.0 pct gain in the June survey
The Tankan also showed combined year to March 2005 parent current profit across all industries is seen rising 13.2 pct, ahead of an expected increase of 10.1 pct in the June survey
"The fact that Japanese firms have upgraded their profit forecast at a time when overseas demand for IT products is slowing down and prices of crude oil and base materials are surging means that Japanese firms have gained a fairly strong profit-generating ability through the past restructuring," DIR's Makino said
"And such a strong profit-generating ability is undoing to an extent the adverse impact of slowdown in IT demand and surging prices of crude oil and base material," he added
However, the September Tankan also underscored growing wariness over surging crude oil prices which could eat into profits
The procurement price index for large manufacturers, which measures the number of firms that see prices rising less those which expect price declines, stood at 34 in the September report, compared with 30 in June and a forecast of 28
The procurement price index also confirmed the deterioration in all eight categories in the September survey from June
"Although Japanese firms have so far successfully absorbed the adverse impact of surging prices of crude oil and base materials due to buoyant revenue growth, they are likely to see difficulties to do so ahead, as export activity is now set to dwindle in line with slowdown of overseas demand," said Taro Saito, economist at NLI Research Institute, research arm of Nippon Life Insurance
On the other hand, the September Tankan also affirmed easing deflationary pressure in Japan
"Further improvement of the selling price index clearly means that Japan is on the right track to pull out of the prolonged deflation," Mizuho Securities economist Osamu Katano said
The selling price index for large firms, which measures the number of firms that see selling prices rising less those which expect price declines, stood at minus 5 at large manufacturers in September, compared with minus 10 in the June poll and a forecast of minus 8
The selling price index also confirmed the improvement in all eight categories in the September survey from June
While the September Tankan confirmed surprisingly stronger business confidence, it also pointed to increased caution ahead
The sentiment diffusion index for large manufacturers is forecast to fall to plus 21 in the December Tankan
The sentiment diffusion index is expected to deteriorate in five of six categories in the December survey, while the sentiment DI at small non-manufacturers is expected to improve by one point to minus 16
"It seems that the improvement of the business sentiment was already over-stretched and it now looks to be unavoidable to see outright downturn in the sentiment DI ahead in line with the slowdown of overseas demand and the pace-down of production activity," DIR's Makino said
BoJ´s Sept Tankan shows upturn in sentiment, but warns slowdown
notíCIas_pt
33
01-10-2004 06:35
Disclaimer:
O Clubeinvest.com informa que nenhuma da informação
aqui facultada deverá ser entendida como conselho ou recomendação
de qualquer tipo de transacção ou investimento.
