Japan’s large manufacturers see business conditions weakening this quarter and the bulk of companies in the world’s third-largest economy plan to pare investment in the year ahead.
The Bank of Japan’s Tankan large manufacturer index came in below estimates in March, unchanged at 12 from the previous quarter, the central bank said. The index is forecast to drop to 10 in June. Companies plan to reduce capital expenditure by 1.2 percent in the fiscal year through March 2016.
The guarded view highlights difficulty Prime Minister Shinzo Abe faces in stoking a recovery from last year’s recession, even as the central bank deploys unprecedented monetary easing that has weakened the yen and helped boost profits to a record. While businesses pile up cash, Abe needs them to boost investment and increase pay for workers.