Japan’s Manufacturers Stay Pessimistic as Yen Tightens Grip
Japan’s largest manufacturers were pessimistic about business prospects for a third consecutive quarter as the yen’s strength and the prospect of power shortages this summer dimmed confidence.
Sentiment among manufacturers with more than 1 billion yen ($12.6 million) in capital was minus 5.7 points this quarter, compared with minus 7.3 three months ago, a government report showed in Tokyo today. A negative number means pessimists outnumber optimists.
Companies including Panasonic Corp. (6752) and Nippon Steel Corp. (5401) are preparing power-saving measures as the government, forecasting a shortfall this summer, will ask users to cut consumption. A yen that’s advanced against the dollar since mid- March is threatening the profits of exporters, who are also contending with a slowdown in global demand.
“Manufacturers will not drastically revise up their capital investment plans due to the headwind of the strong currency,” Naoki Iizuka, a senior economist at Mizuho Securities Co. in Tokyo, said before the report. “They might increase capacity overseas, but nothing in domestic markets.”
Today’s report offers a hint of the results likely in the Bank of Japan (8301)’s Tankan survey. The nation’s most closely watched gauge of corporate confidence is due July 2.
Economic growth may slow by more than half from the first quarter, when gross domestic product rose at a 4.7 percent pace from the previous three months. Bloomberg News surveys of economists indicate GDP gains of 2 percent this quarter and 1.6 percent in the final three months of 2012.
Haven demand for the yen as the euro area crisis deepens threatens to undermine export growth. Toyota President Akio Toyoda, speaking June 4 as chairman of the Japan Automobile Manufacturers Association, said the yen is a “major concern.”
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