PREVIEW-Japan business mood seen worse, capping 2-yr uptrend

(For more stories on the Japanese economy, click [ID:nECONJP])

* WHAT: Bank of Japan’s December tankan survey

* WHEN: 8:50 a.m. Dec. 15 (2350 GMT Dec. 14)

* REUTERS FORECAST: Big manufacturing DI seen +3

By Izumi Nakagawa

TOKYO, Dec 9 (BestGrowthStock) – The Bank of Japan’s closely watched
tankan survey is likely to show confidence at Japanese firms fell
for the first time in seven quarters as the strong yen and
overseas slowdown muddy the outlook for Japan’s economy.

The December tankan is expected to show the sentiment index
for big manufacturers down 5 points at plus 3, the Reuters poll
of 28 economists showed. The sentiment index for big
non-manufacturers is seen falling 2 points to zero.

The economists see optimism among big manufacturers
disappearing in the three months to March, with a median forecast
of zero for the outlook index, and non-manufacturers’ sentiment
to deteriorate to minus 3.

Negative readings mean pessimists outnumber optimists.

“Uncertainty is still high for overseas economies and
currency moves and there are likely to be negative impacts from
the scaling back of subsidies for energy efficient electric
appliances,” said Yuichi Kodama, an economist at Meiji Yasuda
Life Insurance.

Analysts expect the economy to contract slightly in the
October-December quarter as exports slow, production falters and
stimulus-driven domestic consumption wanes. But the economy is
expected to resume an uptrend next year as exports to emerging
economies regain strength.

The BOJ’s quarterly corporate survey for December is also
expected to show big firms plan to increase capital spending by
2.7 percent in the fiscal year ending in March, roughly in line
with the 2.4 increase planned in the September survey.

“Signs of stable rises in capital spending hold the key to
the economy’s outlook longer term, but the recovery in capital
spending so far has been slower than the pace of improvements in
profits,” said Hideo Kumano, chief economist at Dai-ichi Life
Research Institute.

He said chances of a recession are low but the tankan will
help determine whether such chances have increased or not.

The BOJ eased monetary policy in October by pledging to keep
interest rates effectively at zero until the end of deflation was
in sight and creating a 5 trillion yen ($60 billion) pool of
funds to buy assets ranging from government bonds to corporate
debt.

The central bank, whose next scheduled policy meeting is Dec.
20-21, has said expanding the fund is a clear option if the
looming slowdown proves worse than expected.

The monthly Reuters Tankan survey, which closely correlates
with the BOJ’s tankan, showed manufacturing confidence tumbled in
December and their optimism is seen disappearing in three months.
[ID:nTOE6B600A]

The tankan indexes are derived by subtracting the percentage
of respondents who say conditions are poor from those who say
they are good.

Following are economists’ forecast for the tankan.

BIG MANUF BIG NON-MANUF CAPEX

Dec March Dec March

———————————————————–

Median +3 0 0 -3 +2.7

High +8 +6 +1 +2 +3.6

Low +1 -5 -3 -5 +0.4

———————————————————–

BNP Paribas +4 +2 -2 -4 +2.3

Dai-ichi Life +4 0 -1 -4 +2.4

Japan Research +3 -5 +1 -5 +2.4

NLI Research +8 +4 +1 -3 +3

M’bishi UFJ R&C +5 +3 +1 -1 +3.6

M’bishi Research +5 -1 0 -3 +2.7

S’tomo Mitsui AM +1 -3 0 -4 +2.3

Informa GM +2 -2 +1 -3 +3

Barclays PLC +6 +2 -3 -4 +2.9

Citi +2 -1 -3 -5 +2.5

JPMorgan Chase +3 -2 +2.7

Nikko Cordial Sec +3 0 0 -3 +2.2

Daiwa Institute +3 +6 0 +2 +3

Monex +4 +2 -2 -3 +3

HSBC +1 -5 0 -3 +0.4

Daiwa SB +4 0 -2 -1 +3.6

Nomura Sec +2 -3 -2 -2 +2.9

Norinchukin +1 -3 0 -3 +1.6

Morgan Stanley MUFG+5 -3 +1 -2 +2.4

M’bishi UFJ Morgan +6 +2 0 -4 +3.5

Shinkin Central +3 +1 +1 -2 +2.7

Meiji Yasuda Life +2 -2 -2 -1 +2.5

Itochu Corp +2 0 0 -2 +2.1

C’dit Agricole +5 -2 0 -3 +3.2

Mizuho Sec. +2 0 0 +1 +3

Mizuho Sec. R&C +3 0 0 -2 +2.5

Mizuho Research +2 0 0 -1 +3

UBS +6 +3 0 -2
(Writing by Rie Ishiguro; Editing by Michael Watson)

PREVIEW-Japan business mood seen worse, capping 2-yr uptrend