A quarterly business outlook survey by Japan's central bank shows corporate sentiment has improved to its highest level in 11 years in the latest upbeat signal for the economy.
The Bank of Japan's "tankan" index for large manufacturers, released Friday, was 25 in December, up from 22 in September. It was the fifth straight quarterly improvement and the strongest reading since December 2006.
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However, the forecast for the next quarter was less optimistic, at 19.
The economy has gathered momentum thanks to a recovery in exports in tandem with improved conditions in China, the U.S. and other major markets.
The tankan survey of 10,645 companies is viewed as a major indicator for the economy. The index is the difference between companies surveyed that have a "favorable" outlook and those with an "unfavorable" outlook. However, 67 percent of large manufacturers responded to the survey saying they had a "not so favorable" outlook. That number is not reflected in the tankan diffusion index.
The survey also showed a steady improvement in demand versus supply, though Japan still has more manufacturing capacity than needed to meet demand. Prices charged by manufacturers remain flat, though costs for making products, such as for energy and components, have risen.
Corporate investment is forecast to rise by 7.4 percent in the current fiscal year, which ends in March, the survey showed. Manufacturers expect to increase such spending, including land purchases, by 10.2 percent.