TOKYO (Reuters) - Japanese business sentiment was flat in the March quarter and big manufacturers expect only modest improvements in coming months, the Bank of Japan’s tankan survey showed, which suggests the central bank will remain under pressure to deliver more policy stimulus.
The headline index for big manufacturers’ sentiment was minus 4 in March, unchanged from the reading in December and indicating pessimists continue to outnumber optimists, the closely watched quarterly survey showed on Monday.
The reading, which reflects broad growth trends in the economy and is one of the BOJ’s key policy gauges, was worse than the median market forecast for minus 1.
Big manufacturers expect conditions to improve only slightly
over the next three months, with the index for June seen at minus 3 compared with a median forecast of plus 2.
Japan’s economy is emerging from a downturn after it was hit last year by an earthquake and tsunami, severe flooding in Thailand that disrupted supply chains, the yen’s advance to record highs and the euro-zone debt crisis.
The BOJ aggressively eased monetary policy in February and set a 1 percent inflation target, but has held steady since despite calls for more action.
Showing there was some resilience in private consumption, the sentiment index for big non-manufacturers edged up to plus 5 from plus 4 in December, matching a median market forecast, although the index for June was flat at plus 5.
Big firms expect to keep their capital expenditure plans for the fiscal year that started April 1 unchanged from the previous year, less than a median forecast for a 1.0 percent increase, the survey showed.
The sentiment indexes in the BOJ tankan are derived by subtracting the percentage of respondents who say conditions are poor from those who say they are good. A negative reading means pessimists outnumbered optimists.
Additional reporting by Kaori Kaneko; Editing by John Mair