* Manufacturers sentiment Nov index -19, lowest since 2010
* Non-manufacturers index +1, lowest since October 2011
* Recession looms as exports slump, consumption slackens
* Reuters Tankan highly correlated with BOJ tankan
By Tetsushi Kajimoto and Izumi Nakagawa
TOKYO, Nov 15 Sentiment among Japanese
manufacturers fell for a fourth straight month, a Reuters poll
showed, providing more evidence that the world's third-biggest
economy is slipping into recession amid a global slowdown and
tensions with China.
The monthly poll, which closely correlates with the Bank of
Japan's quarterly tankan survey, comes after data this week
showed the economy shrank 0.9 percent in July-September, the
first contraction in three quarters.
Sentiment among non-manufacturers including retailers and
construction firms tumbled in November after holding steady this
year, a sign that private consumption is losing momentum after a
recovery led by rebuilding from last year's earthquake and
"Deterioration in manufacturers' sentiment has speeded up.
The transport machinery sector is a prominent one which has also
impacted on related sectors," said Yuichi Kodama, chief
economist at Meiji Yasuda Life Insurance.
"It is still a question whether the sentiment for both
manufacturers and non-manufacturers will improve next month as
Japan's exports will likely continue to worsen at least within
this year," he said.
Political turmoil could further add uncertainty for the
economic outlook. Prime Minister Yoshihiko Noda is set to
dissolve parliament's lower house on Friday for a snap election
next month, which is likely to cost him his job and return to
power a party that has governed Japan for most of the past 50
A slew of weak data is likely to keep the central bank
under pressure to ease monetary policy further after having
boosted monetary stimulus for a second straight month in October
as a strong yen and weak global demand threatened the
"Demand has fallen more than we expected and there's little
sign of brightness in the outlook," a metal products firm said
in the Oct. 29-Nov. 12 poll of 400 large and medium-sized firms,
of which 270 responded.
"We have been affected by the European debt crisis and the
slowdown in China, with a marked decline in demand for
construction machinery in the Chinese market," one machinery
"The situation in Japan also remains severe as a strong yen
has taken root even though rebuilding from the earthquake is
gradually making progress."
Adding to the gloomy outlook both at home and overseas, ties
between Japan and China have worsened sharply since September,
when a row over disputed islands in the East China Sea led to
violent anti-Japanese protests across China and damaged trade.
Firms in the autos/transport equipment sector were among
those complaining about the effects of the dispute over the
islands, called Senkaku in Japan and Diaoyu in China, which are
located near rich fishing grounds and potentially huge oil and
In the Reuters Tankan, the manufacturers' sentiment index
fell two points to minus 19 in November, matching a low seen in
January 2010 as exporters of steel, chemicals, cars and
electronics all struggled.
The index, derived by subtracting the percentage of
pessimistic responses from optimistic ones, is expected to
recover only slightly to minus 17 in February.
The index for non-manufacturers fell six points to plus 1,
matching a low seen in October last year, led by sectors such as
wholesalers, transport and electric utilities. It is seen edging
up slightly to plus 3 in February.
Japan's economy outperformed most of its Group of Seven
peers in the first half of this year on the back of
reconstruction spending and private consumption, which accounts
for roughly 60 percent of the economy.
But growth has ground to a halt since then, with the
positive effect of rebuilding from last year's earthquake fading
and the strong yen and a global slowdown weighing on exports.
Many analysts expect the BOJ to keep monetary policy
unchanged in a review ending next Tuesday, but some see it
easing policy again at a Dec. 19-20 meeting.