Business confidence loses: BOJ

TOKYO (AP) ― A key central bank survey showed Thursday that confidence at major Japanese manufacturers fell over the last quarter, as the export-reliant country battled a strong yen and an increasingly precarious global economy.

In the Bank of Japan’s “tankan” survey of business sentiment, the main index for big manufacturers fell to minus 4, in the first deterioration in two quarters. Three months ago, it stood at 2.

The figure represents the percentage of companies saying business conditions are good minus those saying conditions are unfavorable, with 100 representing the best mood and minus 100 the worst.

The result is in line with Kyodo News agency’s average market forecast.

Japan has been battling a strong yen, which has hit multiple historic highs this year against the dollar. Amid economic uncertainty in Europe and the U.S., global investors have looked to the Japanese currency as a relatively safe haven.

But Japan relies on exports to drive growth, and the yen’s appreciation has hit companies such as Toyota Motor Corp. and Sony Corp. hard. When the yen climbs, it reduces the value of exporters’ overseas profits when repatriated to Japan.

That has forced companies to shift more production overseas, prompting worries about a hollowing out of Japanese industry.

Big non-manufacturers were feeling slightly more optimistic. Their confidence index rose to 4 from 1 three months earlier.

Medium-sized manufacturers’ reading was flat, at minus 3, while the small manufacturers’ index improved to minus 8, up from minus 11.

The tankan, which helps guide monetary policy, showed that large companies overall plan to boost capital spending by 1.4 percent this fiscal year through March 2012. The figure is down from 3 percent in the September survey.

Large manufacturing companies assume an average exchange rate of 79.02 yen per dollar for this fiscal year, compared with 81.15 yen three months ago.

The Bank of Japan surveyed 10,846 companies nationwide. About 99 percent responded.