Posted on: Wednesday, December 12, 2001

Japanese corporate confidence at lowest point since '99

By Yuri Kageyama
Associated Press

TOKYO — Corporate confidence in the Japanese economy plunged to its worst level in nearly three years as the nation struggled with continuing recession and sagging exports since Sept. 11, a central bank report said yesterday.

The Bank of Japan's quarterly "tankan" survey for December was the first showing companies' sentiments after the terrorist attacks in the United States that have all but shattered hopes for an export-led recovery. Exports have long provided Japan's engine for growth.

The tankan indexes show the percentage of companies saying conditions are good subtracted from those reporting conditions are bad. The bank surveys more than 8,600 companies.

In the latest report, the key index for large manufacturers fell to minus 38 from minus 33 in September, bringing the index to its worst level since March 1999 when it stood at minus 47 — and the fourth consecutive quarter showing deteriorating sentiment.

Yasunari Ueno, chief economist at Mizuho Securities in Tokyo, said the results were better than expected and showed that businesses were making inventory adjustments and relieved that the stock market had avoided a free fall.

The Nikkei stock average, the barometer for the Tokyo Stock Exchange, has languished at a 17-year low, above 10,000 points, for months.

"The main trend is toward a worsening economy," Ueno said. "Maybe the pace will slow down but things are still going to get worse."

Japanese manufacturers have been devastated by a decade-long slowdown that has worsened recently, sending the economy into its third recession in a decade.

Production has weakened. Consumer spending has also been hurt as unemployment continues to edge up, hitting 5.4 percent in October, the highest since the government began keeping track in the 1950s.