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TOKYO • Confidence among Japan’s big manufacturers has improved to the highest level in a decade, underscoring Prime Minister Shinzo Abe’s run of success on the economy as he heads into an election later this month.
Sentiment among large manufacturers rose to 22 from 17 three months ago, the highest level since September 2007, (estimate 18), according to the quarterly Tankan survey released by the Bank of Japan yesterday. The outlook among large manufacturers rose to 19 from 15 in June (forecast 16).
A weak yen and a stronger global economy have fuelled record profits in Japan, even as trade tensions and North Korea’s nuclear programme have clouded the outlook. While Abe’s Liberal Democratic Party is expected to win a parliamentary election set for Oct 22, the margin will be important to his quest for constitutional revision. The longest economic expansion in a decade has raised sentiment, but many households are still waiting for companies to turn those profits into significant pay increases.
“Manufacturing was up this time, which I think is due to the strong export figures through the summer,” said Masaki Kuwahara, senior economist at Nomura Securities Co. “But non-manufacturing is flat, and investment plans from large companies look down a bit. So while exports are strong, domestic demand is still subdued.” “Overall, it’s above consensus,” said Atsushi Takeda, an economist at Itochu Corp in Tokyo. — Bloomberg