Japan Reassesses Business Sentiment In The Light Of March 11th

By: Dr. Mike Campbell The Bank of Japan sponsors the Tankan survey of business sentiment which measures the optimism or pessimism of key market sectors. A value above zero indicates an optimistic outlook within a sector whereas a negative value denotes pessimism. The current survey was largely (72%) concluded prior to the devastating earthquake and tsunami which hit north eastern Japan on 11th March. Consequently, the report doesn’t reflect the ramifications of the disaster and therefore, the Bank has decided to reissue the report to identify which responses were received before the disaster struck.

The report initially showed that optimism had increased by a point from the previous month’s reading of 5, but the impact of the quake will surely lead to a decline in this evaluation when the consequences of the disaster and lingering problems at the Fukushima nuclear power plant are fully taken into consideration in the next report. The disaster left severe damage to the nation’s infrastructure and rolling power-cuts, to say nothing of the cost in human lives.

As if to endorse the pessimism, sales of new vehicles have plummeted, falling by 37% against the same mark in 2010. Toyota’s sales fell by 46%; Nissan’s fell by 38% whilst Honda’s sales saw a 28% decline. The decline is partly due to halts in production in the immediate aftermath of the disaster, but it has been compounded by on-going power cuts and shortages of parts. The effects of component shortages may hit Japanese car production in other countries once stocks held in the production facilities have been depleted.

http://www.dailyforex.com/forex-fundamental-analysis/2011/04/Japan-Reassesses-Business-Sentiment-In-The-Light-Of-March-11/7597