Confidence in Japan's big manufacturers falls to three-year low

Confidence among the country's big manufacturers fell to the lowest level in nearly three years in the first quarter and is expected to worsen in the coming quarter, according to a closely watched Tankan survey by the Bank of Japan, Reuters reported. This underscores heightened pressure on Prime Minister Shinzo Abe and the Bank of Japan to deliver more economic stimulus. Big companies also cut their capital spending plans for the new fiscal year starting in April, underscoring the challenge the Bank of Japan faces in aggressively printing money to spur companies to spend more. The weak data may persuade Abe to once again delay plans to raise the sales tax next year to keep the economy alive. The data also puts pressure on the Bank of Japan to ease monetary policy further when it reviews its quarterly forecast later this month, some analysts said. 'The slowdown in emerging economies, especially China, has hit business confidence. It's a big hit for large manufacturers that are directly linked to global economic conditions,' a BOJ official told reporters at a briefing. The central bank's quarterly tankan survey released on Friday showed that the sentiment judgment index for large manufacturers was positive 6 in March, half the level in December and below the median market forecast of positive 8. It was the lowest level since hitting a positive 14 in June 2013. The big non-manufacturing sentiment judgment index fell to plus 22 from plus 25 three months ago, the first deterioration in six quarters as overseas tourist spending fell. Large manufacturing and non-manufacturing companies expect a deterioration in the outlook for the next three months, underscoring business concerns about the gloomy outlook for the global economy. Large companies cut capital spending by 0.9% in the current fiscal year, compared with the median market forecast for a 0.7% drop, the survey showed. Japan's economy shrank in October-December as exports and consumption weakened. Some analysts now expect the economy to continue to contract in the January-March quarter, which would tip Japan's economy into recession. The Bank of Japan's decision to implement controversial negative interest rates at its January meeting has so far failed to boost stocks and business confidence. The government is already considering a new fiscal stimulus plan, delaying a planned sales tax hike next year in case external headwinds hamper Japan's fragile economic recovery.