BoJ Tankan shows marked improvement in Q2 business confidence
Confidence among Japanese corporates improved markedly over the second quarter, the results of a closely-followed survey revealed.
Yet economists were left dividend on the outlook for the Japanese economy in the back half of 2021.
The Bank of Japan's 'Tankan' or short-run business confidence index for manufacturing firms jumped from a reading of +5 during the first quarter to +14 over the three months to June (consensus: +15).
An index tracking medium-sized enterprises improved from -2 to +5, while that for small ones rose from -13 to -7.
Confidence among large non-manufacturing companies however only improved from -1 to +1, alongside slightly larger increases for medium and small-sized outfits, due to Covid-19 restrictions.
According to Capital Economics's Tom Learmouth, the survey results backed up his view that vaccine rollouts would drive a "strong" economic rebound in Japan over the second half.
"We expect a more marked improvement in the Q3 Tankan provided vaccines stay ahead of the highly transmissible Delta variant,2 he said.
The economist also noted the five point rise in the 'all industry' index to -3, which he said pointed to year-on-year GDP growth of about 4% in the second quarter of 2021.
That was admittedly lower than the 7.0% increase he had penciled-in.
Nevertheless, "all told, the survey bolsters our view that a weak start to the year will soon give way to a strong recovery," he added.
Economists at ING on the other hand highlighted the "mixed" forward-looking outlook indices.
"Even for large manufacturing firms, the forward-looking outlook index was mixed, with large and medium-sized manufacturing firms and small non-manufacturing firms expecting conditions to deteriorate.
"So if this is reflected in GDP numbers, the outlook for 3Q is probably not much better than it will be for 2Q, and we aren't expecting much more than a flat reading then."