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Tankan survey damps down hope for Japan's economy swift recovery - BNP Paribas

FXStreet (Łódź) - BNP Paribas economist Raymond Van der Putten comments on Japan's Q3 Tankan Survey results, with business confidence rising only slightly to 13 and the overall sentiment dropping by 2 points to 13.

Key quotes

"These sectors still feel the impact of the rise in the sales tax and the yen depreciation, which have caused substantial losses in purchasing power. Nevertheless, there are still some bright spots, such as construction that has benefited from the stimulus programme."

"On average, enterprises expect business conditions to remain unchanged in the coming three months."

"Enterprises expect a substantial slowdown in sales growth in the current fiscal year (April 2014-March 2015) compared with FY2013, and a decline in profits, albeit it less than in the June Tankan."

"Nevertheless, the good profits in FY2013 and the favourable financing conditions might stimulate capital spending in FY2014. In fact, enterprises have revised up their investment plans."

"Most enterprises have sufficient capacity but report substantial manpower shortages, in particular in the non-manufacturing sector."

"It suggests that investment will be mostly in labour and energy saving devices."

"Financial institutions report an improvement in business conditions. This is in particular the casefor Shinkin banks and financial institutions for small businesses."

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