The business confidence index among large Japanese manufacturers increased in September from three months earlier to plus 12, its highest level since December 2007, the Bank of Japan said Tuesday, supporting Prime Minister Shinzo Abe’s decision to raise the nation’s sales tax in April as planned.
The Tankan survey’s headline index measuring sentiment among big manufacturers such as carmakers and high-tech firms improved for the third straight quarter, as the yen’s weakness lifted exporters’ earnings. It was also the highest level since the collapse of U.S. investment bank Lehman Brothers Holdings Inc. in September 2008 that brought about the global financial crisis.
The figure, which rose from June’s plus 4, was higher than the average forecast of plus 8 in a Kyodo News survey of economists.
The quarterly survey also said sentiment among nonmanufacturing companies such as those related to construction and services rose to plus 14, up from plus 12 in the previous quarter and matching the average estimate.
The diffusion index represents the percentage of companies reporting favorable business conditions minus that of firms describing unfavorable environments.
Economists said the latest data provided support for Abe, who said Tuesday that the government will raise Japan’s consumption tax rate in April to 8 percent from the current 5 percent as planned and introduce a fresh economic stimulus to ease potential negative effects from the tax hike.
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