BOJ Tankan Shows Big Firms Growing Cautious

        TOKYO--Japanese manufacturers are becoming more cautious about the future despite sharply lower oil prices and other favorable factors, a central bank survey showed Monday, a timely reminder of the fragile state of the economy for Prime Minister Shinzo Abe a day after his decisive election victory.
        Sentiment among large manufacturers remained largely optimistic about current economic conditions and projections of capital spending and corporate profits for the current year remain robust.
        But any upswing in the mood of corporate Japan from the Bank of Japan's additional easing measures, a weaker yen and lower fuel prices appears to have been canceled out by concern over the sputtering economy's future direction as it struggles to overcome a tax-induced slump.
        The Bank of Japan's quarterly tankan poll of over 10,000 companies showed that the index measuring the mood of big manufacturers was at plus 12, down one point from the previous September survey.
        The figure is calculated by subtracting the percentage of respondents saying business conditions are bad from those saying they are good. The result was slightly lower than a median forecast of plus 13 by 16 economists polled by The Wall Street Journal. The survey showed the figure for March falling to plus 9.
        The tankan follows a string of indicators suggesting that the world's third-largest economy isn't out of the woods yet, after a national sales tax increase in April triggered a recession by sapping consumer spending. Japan's slump coincides with a slowdown in Europe and China, putting much of the onus on the U.S. to drive global growth. Cheaper oil prices, Mr. Abe's decision to suspend fiscal tightening and the BOJ's surprise move to expand its stimulus measures have yet to show any noticeable effect on Japanese sentiment.
        A large drop in the Japanese currency brought on by the BOJ's extra monetary easing in October has benefited exporters, by raising the yen value of their overseas earnings. But it has raised concern that it may adversely impact non-manufacturers and smaller companies that depend more on domestic sales, by raising prices of imports they need.
        Despite those concerns, the index for large non-manufacturers unexpectedly rose to plus 16, up three points. Economists had expected plus 12.
        Large companies revised higher their capital investment plans for the year through March to an increase of 8.9% from the previous projection of 8.6% growth in an encouraging sign that firms are willing to boost their investment in the current economic climate.
        Corporate behavior holds the key to the success of Mr. Abe's Abenomics growth strategies that aim to end years of deflation and generate sustainable 2% inflation. Mr. Abe is pushing businesses to put their growing earnings and huge stash of cash to better use elsewhere, such as raising salaries and investing more.
        Write to Tatsuo Ito at tatsuo.ito@wsj.com and Takashi Nakamichi at takashi.nakamichi@wsj.com
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        (END) Dow Jones Newswires

        December 14, 2014 19:30 ET (00:30 GMT)

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