December 9, 2016 / 8:33 AM / 8 months ago

Preview - BOJ Tankan to show manufacturers' mood hits highest since 2015

3 Min Read

Bank of Japan (BOJ) Governor Haruhiko Kuroda leaves a venue after a news conference at the BOJ headquarters in Tokyo, Japan November 1, 2016.Kim Kyung-Hoon

TOKYO (Reuters) - Japanese manufacturers' sentiment was expected to improve for the first time in six quarters and to hit the highest level since 2015, a Reuters poll found, as a weaker yen and higher share prices supported the outlook for corporate profits.

Service-sector sentiment was also seen likely to have improved in the three months to December - the first time in five quarters and suggesting a moderate but steady recovery.

"A weaker yen than the big manufacturers had estimated reduced the worries about corporate profits while both Japan's and overseas economies are expected to continue to grow moderately," said Takayuki Miyajima, senior economist at Mizuho Research Institute.

"But companies will likely take a cautious stance due to the political uncertainty from Donald Trump as U.S. President and in Europe."

The Bank of Japan's quarterly tankan business sentiment index for big manufacturers was expected to improve to plus 10 from plus 6 three months ago, the poll of 20 analysts found.

It would be the highest reading since the index reached plus 12 in December 2015.

The poll found non-big manufacturers' mood expected to improve to plus 19 in December from plus 18 three months ago.

The sentiment indexes for both big manufacturers and non-manufacturers are seen likely stay steady in the coming three months, according to the poll.

Big firms were expected to raise their planned capital spending by 6.1 percent for this fiscal year to March, the poll showed, slightly down from their previous plans to raise capex by 6.3 percent.

The BOJ will publish the tankan quarterly sentiment survey at 8:50 a.m. on Dec. 14 (2350 GMT on Dec. 13).

Separately, core machinery orders, a leading indicator of capital spending six to nine months forward, are expected to have risen 1.0 percent in October from the previous month, the poll found. It would be the first rise in three months after a 3.3 percent fall in September and a 2.2. percent decline in August.

But on an annual basis, the highly volatile core orders measure was seen likely to have fallen 4.5 percent from a year ago, the poll showed, after a 4.3 percent gain in September.

"Core machinery orders have been moving sideways if you average them out," an analyst at SMBC Nikko Securities said in the survey.

The Cabinet Office will release the machinery orders data at 8:50 a.m. on Dec. 12 (2350 GMT on Dec. 11)

Reporting by Kaori Kaneko; Editing by Eric Meijer

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