Japan’s Tankan Survey revealed that large manufacturers’ economic expectations improved for the second consecutive quarter in the three months to September, with the forward-looking Outlook gauge rising to -21, the highest in a year. Non-manufacturing firms also saw an improvement in their three-month forecast, with that metric up to -17, the highest since the end of last year. Both figures remain in negative territory however, which means pessimists continue to outnumber optimists among the firms polled for the survey, albeit by a smaller margin. Perhaps most tellingly, an index of capital investment fell -10.8% in the third quarter, the most in nearly 10 years, showing that firms continue to slim down their operations on expectations of lackluster demand. Indeed, the survey showed that sales are expected to fall -10.5% through the 2009 fiscal year (12 months ending April 2010), more than doubling the drop in FY2008.
