- Overall optimism regarding the economy edges up slightly
- Firms see some weakening in performance and forecasts
- Ageing society not seen as a negative by most firms
On 31 October, the Foreign Chambers in Japan (FCIJ)—an informal organisation of foreign chambers of commerce and business groups that includes the British Chamber of Commerce in Japan—published their autumn 2016 Business Confidence Survey. Conducted over the period 18–28 October, the survey is the 30th of its kind and shows a slight improvement in business sentiment, albeit at a low level.
Using an index with a scale of +2 (strong improvement) to -2 (strong decline), businesses’ views on the economy for the coming six months edged up to +0.10, compared with +0.02 in April’s survey. Meanwhile, expectations for the next 12 months increased to +0.27 from +0.18 six months earlier. Of all the respondents, service firms displayed the greatest confidence.
In contrast to the slight rise in optimism regarding the economy, the performance and forecasts of firms saw across-the-board dips from the April survey. Sales fell to +0.34 on the index, compared with 0.57 in the previous survey, while profitability growth slid to +0.38 from 0.61. Looking ahead, forecasts for sales and profitability growth were +0.64 and +0.54, respectively, compared with +0.73 and +0.71 in April.
Despite this, 72% of firms were still hunting for growth, while 26% of them said they planned to maintain their current level of business. Only 1% of firms declared they intended to downsize, and one firm was considering withdrawing from Japan completely.
Respondents were also asked two additional questions, concerning Japan’s ageing society and the country’s optimum exchange rate. On the former question, 32% of firms said they thought the ageing society would create more business opportunities for them, while 32% thought it would have no effect. Regarding the exchange rate, the average answer for the euro was ¥114.8/€1, while for the dollar it was ¥106.2/$1.
The next survey will be conducted in April 2017.
Full report: www.fcc.or.jp/fcij/bcs.html