Japan's Business Mood Improves, Capex Firm In Boost To Economic Outlook  

• Japan's business sentiment improved in the third quarter, a central bank survey showed, suggesting conditions for a durable economic revival are falling into place even as a global slowdown keeps policymakers cautious about the outlook.
• The big non-manufacturers mood brightened to levels unseen since 1991 when Japan was experiencing an asset-inflation bubble, a sign retailers were benefitting from a rebound in consumption after dismantling pandemic curbs. Companies also retained their robust spending plans and faced a tight labour market, the survey showed, suggesting that conditions for the Bank of Japan to phase out its massive stimulus could fall into place.
• The headline big manufacturers' confidence index rose to 9 in September from 5 in June, the BOJ's closely-watched "tankan" survey showed, exceeding market forecasts for a reading of 6 and marking the second straight quarter of improvement. The Big non-manufacturers index stood at 27, up from 23, the survey showed, above a median market forecast of 24 and improving for the sixth straight quarter. It was the highest reading since November 1991.
• "The stronger-than-expected improvement in the latest tankan survey suggests that the economy will continue to expand at an above-trend pace, which is contributing to mounting staff shortages and persistent price pressures," said Marcel Thieliant, head of Asia-Pacific at Capital Economics. Many big companies said they could pass on higher costs to consumers, leading to improved business mood, a BOJ official told a briefing.
• Corporate earnings and business sentiment will be key to whether wages will keep rising next year in tandem with higher inflation and lay the groundwork for the BOJ to phase out its massive monetary stimulus.

(Source: Reuters)