* Manufacturers sentiment index -13, non-manufacturers +8
* Firms' mood expected to improve further due to soft yen
* Reuters Tankan highly correlated with BOJ tankan
By Kaori Kaneko and Izumi Nakagawa
TOKYO, Feb 21 Japanese manufacturers' sentiment
picked up for the third straight month in February and looks set
to turn positive in the next few months, a Reuters poll showed,
showing a gradual recovery from a slump with help from a weak
Firms remained cautious about a patchy recovery in the
business environment in February but indicated they are
expecting broad improvement in coming months, although a
full-fledged economic recovery may take time.
The poll of 400 firms, of which 257 responded during Feb.
1-18, comes as new Prime Minister Shinzo Abe continues to
aggressively push monetary and fiscal policies which have helped
to sharply weaken the yen and boost share prices to 52-month
The Reuters Tankan, which closely correlates with the Bank
of Japan's key quarterly tankan survey, showed that optimism
among non-manufacturers, including retailers and construction
firms, eased slightly this month but looked set to firmly
rebound in May.
"Progress in the yen's weakness helped our recurring profits
but a recovery in the core business is limited," one metal
products/machinery firm said.
"Government economic policies have not led to an increase in
domestic capital spending. But there is a high chance that capex
will become active on a soft yen and Japan's strengthening
competitiveness," an electric machinery company said.
THINGS ARE LOOKING UP
In the Reuters Tankan, the manufacturers' sentiment index
rose by 4 points to minus 13 in February, further recovering
from the lowest level in three years logged in November, when
sentiment was weighed down by the global economic slowdown and
tensions with China over territorial disputes.
The index, derived by subtracting the percentage of
pessimistic responses from optimistic ones, is expected to
rebound to plus 3 in May, meaning that optimists will outnumber
pessimists for the first time since last May.
The jump was led by improvement in business sectors
including oil refiners, metal products and precision machinery
The index for non-manufacturers edged down by 2 points to
plus 8 and is expected to recover further to plus 21 in May, led
by sectors such as wholesalers, real estate/construction firms
and information services. Rebuilding demand following the
massive March 2011 earthquake and tsunami has supported the
The BOJ in January doubled its inflation target to 2 percent
and made an open-ended pledge to buy assets from next year in an
attempt to pull the country out of deflation.
The central bank kept monetary policy steady this month but
many expect the BOJ will gear up its easing stance once a new
governor replaces Masaaki Shirakawa, who will step down with two
deputies on March 19. Prime Minister Abe plans to consider BOJ
candidates after his trip to the United States from Feb. 21 to
The economy unexpectedly shrank for a third straight quarter
in October-December but analysts project Japan will achieve
moderate growth, helped by an expected recovery in global demand
and Abe's expansionary policies.