Japan business confidence falls after tsunami

AP News
Posted: Apr 04, 2011 4:50 AM
Japan business confidence falls after tsunami

Japan's business confidence fell after the tsunami last month as consumers cut spending and power shortages disrupt factory production, dimming the outlook for the world's third-largest economy.

The Bank of Japan's closely watched "tankan" survey of business sentiment showed the main index for large manufacturers declined to 6 after the March 11 earthquake and tsunami, down from 7 before the disasters.

The index of sentiment among big manufacturers for the next three months tumbled to minus 2 from 6. Among small-and mid-sized manufacturers, it plummeted to minus 18 from minus 6.

The tankan figure represents the percentage of companies saying business conditions are good minus those saying conditions are unfavorable, with 100 representing the best mood and minus 100 the worst.

The central bank released a post-quake version of its March tankan survey on Monday to reflect the impact of the disasters and the nuclear crisis they spawned on the country's business sentiment.

"The results underscored growing worries among all manufactures after the tsunami," said Yoko Takeda, an economist at Mitsubishi Research Institute Inc. "Some companies lost their factories in the tsunami, while many others were forced to shut down production due to massive disruptions in supply chains."

The magnitude-9.0 earthquake and tsunami decimated much of northeast Japan, killing up to 25,000 people. More than 12,000 are confirmed dead, and another 15,500 are missing.

The disaster destroyed many plants in the region, forcing a string of companies, including Toyota Motor Corp. and Sony Corp., to suspend output due to a shortage in components.

The quake and tsunami also crippled Tokyo Electric Power Co.'s nuclear plant in Fukushima, forcing it to cut daily power supply to Tokyo and its environs. Power shortages forced many factories to suspend output.

The tsunami-wrecked Fukushima nuclear plant has continued to leak radiation which has made its way into vegetables, raw milk, tap water in Tokyo, and now the ocean.

Sentiment was also gloomy among non-manufacturers, including department stores, the tankan survey found.

The index of sentiment at large non-manufacturers in the next three months dived to minus 4 from 7. Major department stores reported a sharp fall in March sales.

"Retailers are pessimistic about their business. Consumers have simply stopped buying things except necessary items. Amid the crisis, people are not in the mood to buy," said Junko Ikkatai, an economist at Japan Research Institute.

Japan's government has said the cost of the earthquake and tsunami that devastated the northeast could reach $309 billion, making it the world's most expensive natural disaster on record.