Survey May Say Japan Business Confidence Up

Japanese business confidence is expected to rise to its best in nearly three years, a central bank survey will probably show, adding to expectations that interest rates might rise as early as this month. The Bank of Japan’s quarterly tankan survey is predicted to show the sentiment index for large manufacturers at -3 in June, up from -9 in March, according to a median of 23 forecasts in a Bloomberg survey. That’s the highest since September 1997, which was also the last time the index was positive. “The June tankan should further support the view that the economy is approaching sustainable growth, a critical issue for the Bank of Japan policy,” said Peter Morgan, a senior economist at HSBC Securities (Japan) Ltd. Business confidence has been improving for 18 months as the economy clawed its way back from recession. Combined with a better outlook for spending on factories and equipment, rising confidence could encourage companies to pay workers more and, in turn, kick-start consumer spending. A two-year drought in spending plans at large companies will probably end in June. Economists expect investment plans for the fiscal year through March 31 to be revised to show growth of 2.3%, from a 0.6% decline in March. The Bank of Japan will release the June tankan report Tuesday.