Japan's firms grow in confidence

Prime Minister Shinzo Abe is seeking to revive Japan's economy. Photo / AP

Manufacturers increasingly optimistic about business outlook: survey.

Japanese manufacturers are increasingly optimistic about the business outlook in the months ahead, according to a survey released yesterday in advance of the expected approval of a sales tax increase.

Results from the Bank of Japan's "tankan" quarterly survey showed large manufacturers were especially upbeat, with a reading of positive 12, up from 4 in the July survey.

Prime Minister Shinzo Abe was waiting for the survey's release to go ahead with a long-awaited decision on increasing the sales tax next year to 8 per cent from the current 5 per cent.

He was expected to announce the Cabinet's approval of that plan, with tax breaks and other stimulus meant to counter the dampening effect on consumer demand that is expected to follow the tax hike's implementation next April.

The tankan's results contrast with data for August showing higher unemployment and lower household spending. Improved hiring and wages are needed to spur a rebound in consumer spending to help underpin a sustained recovery after years of stagnation.

Lower readings imply more pessimism. The tankan showed sentiment of all enterprises improved to 2 from the previous survey's -2. But the sentiment for all large enterprises remained at -2. For small firms, the index was at -9, up from -14.

Since taking office late last year, Abe has sought to revive the economy with ultra-easy monetary policy and hefty government spending. AP