TOKYO (MNI) – Confidence among major Japanese manufacturers was
only slightly damped by the 9.0-magnitude earthquake on March 11 while
sentiment among large non-manufacturers as well as small manufacturers
and non-manufacturers was actually better than the results for the
pre-disaster survey period, more detailed accounts of the Bank of
Japan’s quarterly March Tankan survey released on Monday showed.

But the BOJ’s follow-up analysis of the survey based on the
pre-quake (Feb. 24 to March 11) and post-quake (March 12 to March 31)
data collection periods showed that companies that responded in the
latter period expect their outlook will slump more than the
deterioration forecast by firms that answered before the quake.

“Because the number of respondents after the earthquake is limited,
it may not be appropriate to compare the levels of the diffusion index
before the earthquake with those after the earthquake,” the BOJ said.

“Instead, the comparison of changes from actual result to forecast
within the same category appears more appropriate.”

The latest results showed that only limited immediate negative
effects of the powerful earthquake and tsunami that wiped out villages,
factories, fishing ports and farmlands along the northeastern Pacific
coast.

The disaster has also caused Japan’s on-going nuclear crisis, which
in turn has led to power shortages to factories, offices and homes in
northeastern Japan. Tokyo Electric Power Co, the operator of the
quake-hit Fukushima Daiichi nuclear power plant, dominates the
electricity market in Tokyo and eight neighbouring prefectures.

Among responses after the earthquake, the Tankan survey headline
index — showing current business sentiment among large manufacturers —
improved slightly to +6 in March from +5 in December.

Post-quake respondents expected the index to worsen to -2 in June.

Before the disaster, the benchmark index among large manufacturers
showed larger improvement — to +7 from +5 in December. It is expected
to slip to +3 in June.

In the original March Tankan survey results released on Friday, the
headline index — showing current business sentiment among large
manufacturers — rose to +6 in March from +5 in December before slumping
to +2 in June.

The BOJ conducted the Tankan survey between Feb. 24 and Mar. 31,
with about 72% of surveyed firms responding by March 11, the day of the
earthquake.

In today’s release, business confidence among large
non-manufacturers after the quake improved to +7 from +1 three months
earlier. But the index was expected to worsen to -4 in June.

The diffusion index among large non-manufacturers before the quake
stood at +1 in March, unchanged from December. The DI is expected to
worsen to zero in the three months ahead.

The original March Tankan survey released on Friday showed that
business confidence among large non-manufacturers improved for the first
time in two quarters, rising to +3 from +1 three months earlier. But the
index is expected to worsen to -1 in June.

The sentiment indexes for small manufacturers and non-manufacturers
after the quake improved to -6 in March from -12 in December and to -19
from -22 in December, respectively.

But they are expected to slip back to -18 and to -29 in June,
respectively.

The DI for smaller manufacturers before the quake improved -10 from
-12 and it is expected to worse to -16 in June. The DI for smaller
non-manufacturers before the quake improved to -18 from -22 and is
expected to worsen to -25 in June.

The original Tankan survey released on Friday showed that the
sentiment index for small manufacturers improved to -10 from -12 in
December, up for the seventh straight quarter. But the index is expected
to deteriorate to -16 in June.

The index for small non-manufacturer rose to -19 in March from -22
in December, up for the first time in two quarters.

But the index is expected to worsen to -27 in June.

The followup to the March Tankan survey didn’t show the breakdown
by industry.

tokyo@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4833 **

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