BIG Japanese manufacturers turned pessimistic about business conditions in April-June but expect things to improve in July-September in a sign that companies see a quick recovery from the April 1 increase in the sales tax.

    The business survey index (BSI) of sentiment at large manufacturers slid to minus 13.9 in April-June from plus 12.5 in the previous quarter. However, companies anticipate the sentiment index to improve to plus 16 in July-September due to expectations that consumer spending will quickly rebound.

    The survey, released by the government, bodes well for the Bank of Japan’s (BOJ) closely watched tankan sentiment index due next month and points to a declining need for further monetary easing to support the economy.

    “Companies expect a slowdown in growth after the sales tax hike to be temporary because they expect consumer spending to remain strong,” said Norio Miyagawa, senior economist at Mizuho Securities Research & Consulting.

    “The optimism is spreading to manufacturers. I think the chance of more monetary easing is very low,” he said.

    The BSI sentiment survey, which is released by the Ministry of Finance and a branch of the Cabinet Office, also showed that companies are turning more positive on capital expenditure, which is important for economic growth because it can fuel job creation.

    The BSI measures the percentage of firms that expect the business environment to improve from the previous quarter minus the percentage that expect it to worsen.

    Manufacturers plan to raise capital expenditure by 10.8 percent in the fiscal year that started in April, more than the 2.4 percent increase indicated in the previous survey thanks to expectations that exports will start to pick up momentum.(SD-Agencies)