2 Jul 2015
Japan: June Tankan survey points to positive attitude on capital investment plan – DB
FXStreet (Barcelona) - Mikihiro Matsuoka, Chief Economist at Deutsche Bank, notes that the most interesting development in the BoJ’s Tankan Survey remains the large upside revision in capex.
Key Quotes
“The most important development in the Bank of Japan’s June Tankan survey is a large upward revision in the FY2015 capital investment plan across large and small companies and manufacturing and non-manufacturing industries, even if we take into account a typical upward revision in the June survey during economic expansions.”
“The capital investment plan (including software but excluding land acquisition) was revised upward to 5.6% YoY for all sizes and all industries (up 5.0ppt from the March survey). Including the financial institutions, the plan was revised upward to 6.0% YoY (up 7.0ppt). It seems to have finally become illogical to not increase investment in Japan, as a result of disappearing negative effects from the consumption tax hike, corporate tax cuts, continuing economic expansion, a rise in capacity utilization, aging of facilities, and a rise in the cost of not investing in real assets.”
“We discussed our view of the broadening recovery in domestic capital investment in large companies and manufacturers, and the rise in labor-saving investment in labor-intensive industries, whose likelihood seems to have risen further. In contrast, the outlook for the June survey for sales and recurring profit growth in FY2015 under economic expansion remains cautious.”
Key Quotes
“The most important development in the Bank of Japan’s June Tankan survey is a large upward revision in the FY2015 capital investment plan across large and small companies and manufacturing and non-manufacturing industries, even if we take into account a typical upward revision in the June survey during economic expansions.”
“The capital investment plan (including software but excluding land acquisition) was revised upward to 5.6% YoY for all sizes and all industries (up 5.0ppt from the March survey). Including the financial institutions, the plan was revised upward to 6.0% YoY (up 7.0ppt). It seems to have finally become illogical to not increase investment in Japan, as a result of disappearing negative effects from the consumption tax hike, corporate tax cuts, continuing economic expansion, a rise in capacity utilization, aging of facilities, and a rise in the cost of not investing in real assets.”
“We discussed our view of the broadening recovery in domestic capital investment in large companies and manufacturers, and the rise in labor-saving investment in labor-intensive industries, whose likelihood seems to have risen further. In contrast, the outlook for the June survey for sales and recurring profit growth in FY2015 under economic expansion remains cautious.”