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Japan's business morale improves

Japanese business sentiment is on the rise, a government survey shows.
Japanese business sentiment is on the rise, a government survey shows.

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TOKYO, Japan -- Japanese businesses reported significantly improved sentiment in the September quarter amid a recovery in exports and a better global outlook, a government survey shows.

The survey, released Friday by the Cabinet Office's Economic and Social Research Institute, follows a report earlier this week that Japan's economy grew at an annualized rate of 1.4 percent in the same quarter.

The quarterly business survey index (BSI) for July-September rose to plus seven from minus 21 in the previous quarter, according to the institute.

The BSI subtracts the percentage of firms saying domestic economic conditions were unfavorable from those reporting favourable conditions.

Responses on the outlook for the months ahead showed the BSI at plus 15 for October-December and plus 21 for January-March.

Earlier this week, the consensus from 11 think tanks surveyed by the Nihon Keizai business daily said growth in the September quarter was up 0.3 percent from the previous quarter.

That was the seventh straight quarterly gain for the world's No. 2 economy.

Japan's official growth rate will be known late next week, with the Cabinet Office due to release preliminary GDP figures on Friday, November 14.

After industrial production surged in September, some commentators suggested the Japanese economy was looking in better shape.

ING's Tokyo-based chief economist Richard Jerram said last week the outlook for the next two months was "remarkably positive".

"It is increasingly clear that the speed of cyclical recovery is accelerating, primarily in response to stronger exports," he noted in a commentary. "This means that year-on-year growth rates have started to accelerate again."

He suggested the September quarter would be the trough in terms of year-on-year growth.

ING is forecasting GDP growth of 3.2 percent for the financial year to next March, and 2.3 percent for the year after that.

The Bank of Japan's closed watched Tankan survey of business sentiment, released at the start of last month, showed confidence among big manufacturers was at its highest level in almost three years in September.

Other figures showed spending by wage earners in August rose 2.2 percent from a year earlier.

But the Nihon Keizai reported that personal spending, which accounts for nearly 60 percent of Japan's GDP, was flat in real terms in the July-September period.

It said the cool northern summer resulted in fewer purchases of seasonal products, such as air conditioners. Higher summer bonuses, however, helped maintain spending levels.

Capital spending was up 1 percent and exports grew 2.8 percent for the quarter, according to the private-sector estimates.

It said capital spending fueled GDP growth in the April-June term, and exports led the economy in the July-September term.

Exports to the U.S are expected to increase because the U.S.'s economy grew at an annualized 7.2 percent rate in the July-September period. Growth in capital spending is forecast to slow but remain positive.

A rise in the yen against the dollar since the Group of Seven meeting in Dubai in September began to have an impact on exports in October, but gains for the dollar in the past few days may ease that.

The dollar sank to a three-year low of 107.83 yen on October 29, but is trading Friday at 110.07 yen.

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