Market Outlook: Tankan Survey Indicates Limited Signs of Recovery in Japan

Foreks - Capital Economics stated that the moderate increase in business conditions observed in the Bank of Japan's Tankan survey indicates that a significant rebound in activities this quarter is unlikely. Toh Au Yu from Capital Economics noted that conditions improved across company sizes and sectors in the 4th quarter survey, which is consistent with a quarterly GDP growth slowdown of approximately 0.1% for the quarter. Toh Au Yu also added that the declining employment conditions indicator, as more firms reported staffing shortages, remained unchanged, indicating that labor shortages persist. The increase in capital expenditure forecasts was partly driven by capacity hoarding. The tendency for capital expenditure plans to be a better guide for investment than production capacity suggests that investments outside of the housing sector may slow down.