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Last Updated: Friday, 1 July, 2005, 10:26 GMT 11:26 UK
Japan business gains confidence
Honda cars waiting for export
Exports are losing ground, but domestic demand is growing
Japanese businesses are upbeat about the country's economic performance, a new survey indicates.

The closely-watched Tankan survey, carried out quarterly by the Bank of Japan, showed corporate sentiment was gaining confidence.

The Tankan should quell fears about the strength of the recovery after recent data showing Japan's traditional motor of growth - exports - were slowing.

Domestic demand seems finally to be taking up the slack, recent data shows.

To prepare the Tankan, the Bank of Japan surveys thousands of businesses to discover the mood in different sectors of the economy.

Investment prospects

The most keenly-watched measure - the "diffusion index" - showed that in the three months to June, big manufacturers gained in confidence from an already bullish reading in March.

The index rose to 18, up from 14 in March and better than economists' forecasts for a reading of 15.

Non-manufacturers were also more optimistic.

Elsewhere in the survey, companies reported they were ready to increase their capital spending by 9.4% this year - a leap from March's prediction of just 1%.

But the forward-looking part of the survey, the outlook index, showed a slightly more muted response.

Economists put the caution down to continuing concerns about exports - particularly to China, Japan's second-biggest trade partner - which have flagged as Beijing tries to cool its wildfire growth rate.


SEE ALSO:
Japan hit by weak export growth
22 Jun 05 |  Business
Exports surge fuels China growth
15 Jun 05 |  Business
Japan's overseas earnings expand
09 Jun 05 |  Business
Japanese growth confirms recovery
17 May 05 |  Business


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