— Japan MOF: Q3 Major Firm Sentiment +6.6 Pt Vs Q2 -22.0 Pt
— Japan MOF: Major Firm Sentiment Seen Q4 +8.1 Pt, Q1 +6.0 Pt
— Japan MOF: FY11 All Firm Capex Plans +5.4% Vs Q2 Poll +4.9%
— Japan MOF: FY11 All Firm Current Profit +2.8% Y/Y Vs Q2 -1.1%

TOKYO (MNI) – The business sentiment diffusion index for major
Japanese firms rebounded to +6.6 points in July-September from -22.2
points in the previous quarter, thanks to the continued recovery in
quake-hit supply chains for cars and electronics, the results of a
quarterly government survey released on Monday showed.

In the previous survey released in June, the index for the third
quarter of 2011 was forecast to improve to +4.4 point.

The 6.6-point rise was the largest gain since +7.1 points seen in
the third quarter of 2010, supported by the recovery in auto output and
strong demand for smartphones, a MOF official told reporters.

Business sentiment plunged by 51.3 points in January-March 2009,
the largest decline on record.

The index is computed by subtracting the percentage of companies
reporting deteriorating business conditions from the percentage of those
reporting an improvement. A positive figure indicates the majority of
firms see butter business conditions.

The latest survey also showed that major firms’ sentiment is
expected to rise to +8.1 percentage point in the final quarter of 2011
before rising further by +6.0 points in the first quarter of 2012.

The rebound in sentiment came as Toyota and other leading
manufacturers have revived production facilities and supply chain
networks in northeastern Japan that were ravaged by the March earthquake
disaster.

The survey showed that companies expect their combined capital
spending to rise 5.4% in fiscal 2011, up from a 4.9% increase projected
in the June poll.

The increase will be led by strong demand for smartphones,
construction and mining machinery as well as gas pipelines, the ministry
official said.

Manufacturers plan a 9.0% hike in spending on factories and offices
in the current fiscal year, up from a 6.9% increase seen in the previous
survey, while non-manufacturers forecast a 3.0% rise in capex, down from
a 3.8% rise projected in the June poll.

The survey showed firms’ current profits will rise 2.8% in fiscal
2011, up from a 1.1% drop forecast in the previous survey.

The Finance Ministry and the Cabinet Office conducted the joint
survey on Aug. 15, covering 15,504 companies capitalized at Y10 million
or over, of which 12,255 replied.

tokyo@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4835 **

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