Large companies in Japan intend to boost investment this year, despite the fact that the strengthening of the yen undermined their confidence. The country’s business sentiment retreated from more than a 10-year high.
According to the Bank of Japan’s closely watched quarterly “tankan” survey, the index for big manufacturers’ sentiment decline to 24 in the first quarter from 26 in the previous quarter.
Meanwhile, analysts had expected a fall to 25.
The indicator for non-manufacturers edged down to 23 compared with a revised reading of 25. The score was expected to fall to 24.
Nevertheless, companies plan to increase their investment by 2.3% in the fiscal year which will end in March 2019.
Among small companies, manufacturers' sentiment was unchanged at 15, while that of service firms rose to 10 from 9.
The lowest growth in two years and the yen appreciation suggest that the country's central bank still cannot abandon its stimulus measures, which are becoming more difficult to maintain. The further strengthening of the yen could undermine the growth of wages in 2018, which will damage the efforts of the Bank of Japan to accelerate inflation.
