Japanese business confidence is up despite poor industrial production

In the three months to September Japanese business confidence has improved, according to the Bank of Japan’s quarterly study.

The Takan survey included over 10,000 companies and is considered to be one of the most comprehensive indicators of how companies across Japan feel about the recent sales tax increase.

The Tankan survey revealed that compared to the previous quarter, confidence among large manufacturers increased to plus 13, one point above the last quarter, and well ahead of what analysts had forecast. However, confidence among large companies that are not in manufacturing fell to plus 13 from plus 19 in the previous quarter.

When Shinzo Abe became Prime Minister in late 2012 he said that he would work on helping the Japanese economy pick itself back up again. However, his recent consumption tax hike has made many concerned about the outlook of the economy.

In April’s sales tax rise was raised from 5.0 percent to 8.0 percent.

Industrial production fell in August by 1.5 percent compared to the previous month July – missing a market median forecast of a 0.3 percent increase. While, retail sales in Japan was up 1.9 percent compared to the previous month and the unemployment rate decreased to 3.5 percent – the lowest since 1997 and a percent the Bank of Japan states is near full employment.

Data from the internal affairs ministry revealed that household spending dropped in August by 4.7 per cent from a year earlier.

All in all, the data does not paint a pretty picture about the economic outlook of the country in the short-term.