Confidence Up Slightly in Japan as Trade Dips

Japan business confidence rose less than expected this quarter, a Ministry of Finance survey said today, and further gains are seen as limited, evidence businesses expect the economy to slow.

Separately, the government said Japan’s broadest measure of trade fell 28.6% in October from the same month a year ago.

The current account surplus decreased to $6.93 billion, measured before adjustment for seasonal factors, the Finance Ministry said. The current account measures trade in merchandise, services, tourism and investment.

The October decrease followed a rise of 26.8% in September and of 24.1% in August.

The Ministry of Finance’s index of sentiment at large companies rose to 6.3 for the three months to Dec. 31, from 5.9 the previous quarter, the Ministry of Finance said. That was less than the 8.6 reading forecast in the previous survey. The index is seen rising to 11.1 in the first quarter next year and staying there in the second quarter.

“As the end of the year approaches, Japan’s economy stands at a turning point,” said Jesper Koll, chief economist at Merrill Lynch (Japan) Inc. in a report.

The economy grew just 0.2% in the third quarter, and more than one-quarter of economists surveyed by Bloomberg News said it might contract this quarter. Growth in the U.S., Europe and Asia is slowing, hurting exporters, who helped drive growth earlier this year.

The Ministry of Finance surveyed 19,140 companies, excluding banks, insurers and other financial companies, capitalized at $90,000 or more.

The smaller improvement in confidence might be reflected in the Bank of Japan’s tankan business survey for December, which is scheduled to be released Wednesday. The widely watched central bank confidence index will probably post its smallest gain in the two years it’s been rising after snapping six straight declines.