Corporate Japan Sentiment Rises in First Quarter

Sentiment at large Japanese companies in the January-March period rose to a record high, but they are wary of the economic outlook as a planned sales tax hike in April may choke consumption and investment, a government survey showed Wednesday.

The confidence index covering firms capitalized at 1 billion yen or more came to 12.7 in the first quarter of 2014, up from 8.3 for the three months through December and hitting its highest level since comparable data became available in 2004, according to the joint survey by the Finance Ministry and Cabinet Office.

Many large companies, however, expect business conditions to sharply deteriorate after the country’s sale tax rate is raised to 8 percent from the current 5 percent next month, with the index at minus 9.8 for the April-June period, the survey showed.

The index is forecast at 8.3 in the three months through September, indicating firms believe an economic downturn in the wake of the tax increase would be only temporary, a Finance Ministry official said.

During the January-March period, business sentiment at manufacturers climbed to 12.5 from 9.7 the previous quarter on the back of a rush in demand prior to the sales tax hike, while that at nonmanufacturers gained to 12.8 from 7.5, the survey showed.

The results, which are based on valid answers provided by around 13,000 companies as of Feb. 15, are calculated by subtracting the percentage of firms reporting deteriorating business conditions from those observing improvements.

via Mainichi

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