Japan business mood improves in encouraging sign for economy

Japanese manufacturers' confidence rose for a third straight month to a 15-month high in November, while the mood in the service sector rebounded from a 3-1/2-year low in the prior month, a Reuters poll showed, in a sign of a gradual economic recovery.
The Reuters Tankan, which strongly correlates with the Bank of Japan's quarterly tankan survey, found manufacturers' mood is expected to worsen over the next three months, while service-sector sentiment is seen rising further.
The monthly poll of 531 large and mid-sized firms, of which 257 responded between Oct. 26-Nov. 8, comes as Republican Donald Trump's shock victory in the US presidential election adds to uncertainty over the global economic outlook.
Data out on Monday is expected to show Japan's economy grew at an annualized rate of 0.9 percent in the third quarter, led by external demand while sluggish domestic activity remains a source of concern. Analysts expect growth to remain modest for the rest of this year.
The Reuters Tankan's sentiment index for manufacturers rose to 14 from 10 in October, driven by exporters of cars, electronics, precision machinery and metal products.
But it was expected to worsen to 3 in February.
"The yen's gains have eased after rising close to 100 yen to the dollar but global uncertainty is high due to the US presidential election and Britain's exit from the EU," a manager at a machinery maker said in the survey, which companies answer anonymously.
"Underlying demand is soft as consumer mood cools."
The service-sector index rose for the first time in three months to 15 from 9 in October, which was the lowest reading since February 2013 — just two months before the BOJ embarked on an aggressive but so far ineffective stimulus campaign to spur economic activity and get inflation up to 2 percent.
The service-sector index was seen rising further to 18 in February, reflecting recovery in retailers' sentiment, which last month hit the lowest reading since February 2015 due to bad weather and a run of typhoons.
Sentiment indexes subtract the percentage of companies saying conditions are poor from those saying conditions are good. A positive number means optimists outnumber pessimists.
The BOJ's last tankan showed last month big Japanese manufacturers' mood held steady in the third quarter while service-sector sentiment fell to its lowest in nearly two years.
The central bank last week held off on expanding stimulus despite pushing back the timing for hitting its elusive price target, signalling that it will keep policy unchanged unless a severe shock threatens to derail a fragile economic recovery.

Source: Arab News