Big manufacturers39; June sentiment index 5 vs 1 in March
Big nonmanufacturers39; index hits 23 vs 22 in March
Large firms expect to increase capex by 13.4 in fiscal 2023

TOKYO, July 3 Reuters Japanese business sentiment improved in the second quarter as raw material costs peaked and removal of pandemic curbs lifted consumption, a central bank survey showed, a sign the economy was on course for a steady recovery.

Companies expect to increase capital expenditure and project inflation to stay above the Bank of Japan39;s 2 target five years ahead, the quarterly tankan showed on Monday, offering policymakers hope that conditions for phasing out their massive monetary stimulus may be gradually falling into place.

The tankan confirmed our view that Japan39;s economy is on track for a moderate recovery, said Atsushi Takeda, chief economist at Itochu Economic Research Institute.

While input prices have declined, output prices continue to rise in a sign companies are being able to pass on costs. That39;s a good sign for the BOJ39;s inflation outlook and may prod the bank to tweak its yield control policy later this year.

The headline index measuring big manufacturers39; mood stood at plus 5 in June, bouncing back from a twoyear low of plus 1 hit in March in a sign firms were recovering from the hit from rising raw material costs and supply disruptions.

The reading, which compared with a median market forecast for plus 3, was the highest since December 2022….