Major Japanese Firms Remain Upbeat

TOKYO -- Confidence at major Japanese companies remained the same as three months ago, a closely watched Bank of Japan survey showed Monday, possibly reinforcing expectations that the central bank will raise interest rates in August.

The quarterly "tankan" survey, which polls more than 10,000 companies nationwide, showed that the sentiment index for large manufacturers stood at 23 in June, unchanged from the previous survey in March. A similar index for large non-manufacturers was unchanged at 22.

The indexes subtract the percentage of companies saying business conditions are bad from the percentage saying they are good, so the higher the number the greater the portion of optimistic companies. Both results matched forecasts.

The yen's recent weakness and healthy profit growth has buoyed sentiment at Japanese companies. Still, confidence has slipped a bit from December, when the major manufacturers' index rose to 25, the highest in about two years.

The results confirm the government's view that the economy is steadily expanding, Chief Cabinet Secretary Yasuhisa Shiozaki said. But any interest rate decision, he added, would be left up to the Bank of Japan.

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"We think the BOJ will carry out policies that are in line with the government's economic policies, but that is their independent decision," Shiozaki told reporters.

The bank, which is technically independent from the government, last raised its benchmark interest rate in February, lifting it from 0.25 percent to 0.5 percent. A growing number of analysts and investors believe the central bank will raise rates again in August, after July's parliamentary elections.

The tankan survey also showed that major companies plan to increase boost capital investment by 7.7 percent over the fiscal year that started in April. That was higher than their initial estimate in March of a 2.9 percent increase.

The investment estimate is prone to rise sharply from March to June because companies during the period map out clearer business plans for the whole fiscal year.

And while the upward revision underscores Japanese companies remain eager to buy or renew plants and equipment to expand operations, it is also below the actual 10.0 percent increase in capital spending last fiscal year.

Japanese stocks fell slightly in morning trading, with the Nikkei 225 index down 0.1 percent.

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