Japanese business confidence improved over three months to December: survey

Japanese business confidence improved over the three months to December to its peak level in six years, according to a central bank survey, indicating prime minister Shinzo Abe's "Abenomics" of stimulus policies were gaining broader ground across the economy.

The Bank of Japan's quarterly Tankan survey showed improved outlook not only for big firms but also for smaller companies, which had lagged in capitalising on a recovering economy.

The sentiment of small manufacturers hit a six-year high and the small non-manufacturers' index too turned positive, which meant optimists outnumbered pessimists – for the first time since 1992.

The Tankan lent support to the view of Japanese central bank, Bank of Japan, that the economy was recovering moderately.

Junko Nishioka, chief Japan economist at RBS Securities, told The Guardian the economy was moving in line with the BoJ's forecasts, which meant the central bank would keep monetary policy steady at least next week and in January.

The headline index for big manufacturers' sentiment was up 4 points from the previous quarter to +16, the Tankan showed today, which was slightly above a median market forecast of +15.

It came as the fourth straight quarter of improvement and the highest level since December 2007, with companies benefiting from robust domestic demand and a weak yen that gave their goods a competitive advantage overseas.

The survey showed large companies also planned to boost their capital spending by 4.6 per cent next year.

According to commentators the results indicated that the government's stimulus policies, aimed at spurring growth, might be starting to take effect.

Prime minister Shinzo Abe had introduced aggressive measures to end nearly two decades of deflation - or falling consumer prices - in the economy.

Analysts said the survey's results showed that his policies, also known as Abenomics, were starting to have an impact.

BBC quoted Marcel Theliant, Japan economist at Capital Economics in Singapore, as saying, the general Abenomics-related boost and the weak yen had helped, along with the monetary easing by the Bank of Japan.

He said, there was a lot of fiscal and monetary stimulus, adding that the measures had had an effect in the short term.

However, Theliant said the key question was whether the measures could create a longer-term improvement in the economy, adding that the structural reform measures had been rather disappointing so far.