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2 Apr 2015
Tankan survey confirms Japanese economy is on recovery path – Nomura
FXStreet (Barcelona) - Reviewing the Tankan survey release, Tomo Kinoshita, Research Analyst at Nomura, views that the economy is on track for a gradual recovery.
Key Quotes
“In the BOJ's March Tankan survey, the manufacturing sector business conditions DI (large enterprises) came in at +12, below the consensus forecast (Bloomberg survey median) of +14. The business conditions DI for large manufacturers has held at between +12 and +13 since the June 2014 survey, and the March survey continued that trend.”
“Although real exports were relatively firm for January and February, the survey of manufacturers' production forecasts for March has output declining m-m. We see this as lying behind the DI only holding flat.”
“On the other hand, the business conditions DI for nonmanufacturing (large enterprises) was, at +19, ahead of the consensus forecast (+17), rising again, as in the December 2014 survey. We attribute this to lively activity at domestic demand-related companies supported by low crude oil prices and the deferral of the consumption-tax hike.”
“The future business conditions DI for large manufacturers was, at +10, below the consensus forecast of +16. The future business conditions DI for large nonmanufacturers, however, was, at +17, only slightly below the consensus forecast of +18.”
“For FY15, capex plans (all industries, large enterprises) call for a 1.2% y-y decline, weaker than the consensus forecast of +0.5%.”
“Initial capex plans are often downbeat in March, but tend to be revised up over time. Considering that FY14 plans in the March 2014 survey had seen capex rising 0.1% y-y, however, it does appear at this point that large enterprises are taking a more cautious stance on spending than in FY14.”
“Large manufacturers in the latest survey project y-y growth in capex in FY15 of 5.0%, indicating moves to expand capital investment in Japan against the backdrop of yen depreciation.”
“Considering growing labor shortages, we think it likely that companies will gradually expand labor-saving investment.”
“Overall, we think the latest Tankan confirms that the Japanese economy is on a gradual recovery path.”
Key Quotes
“In the BOJ's March Tankan survey, the manufacturing sector business conditions DI (large enterprises) came in at +12, below the consensus forecast (Bloomberg survey median) of +14. The business conditions DI for large manufacturers has held at between +12 and +13 since the June 2014 survey, and the March survey continued that trend.”
“Although real exports were relatively firm for January and February, the survey of manufacturers' production forecasts for March has output declining m-m. We see this as lying behind the DI only holding flat.”
“On the other hand, the business conditions DI for nonmanufacturing (large enterprises) was, at +19, ahead of the consensus forecast (+17), rising again, as in the December 2014 survey. We attribute this to lively activity at domestic demand-related companies supported by low crude oil prices and the deferral of the consumption-tax hike.”
“The future business conditions DI for large manufacturers was, at +10, below the consensus forecast of +16. The future business conditions DI for large nonmanufacturers, however, was, at +17, only slightly below the consensus forecast of +18.”
“For FY15, capex plans (all industries, large enterprises) call for a 1.2% y-y decline, weaker than the consensus forecast of +0.5%.”
“Initial capex plans are often downbeat in March, but tend to be revised up over time. Considering that FY14 plans in the March 2014 survey had seen capex rising 0.1% y-y, however, it does appear at this point that large enterprises are taking a more cautious stance on spending than in FY14.”
“Large manufacturers in the latest survey project y-y growth in capex in FY15 of 5.0%, indicating moves to expand capital investment in Japan against the backdrop of yen depreciation.”
“Considering growing labor shortages, we think it likely that companies will gradually expand labor-saving investment.”
“Overall, we think the latest Tankan confirms that the Japanese economy is on a gradual recovery path.”