From Capital Economics on today's Tankan from the Bank of Japan (more here):
- Small rise in today's Tankan index for all industries suggests that economic activity remained sluggish last quarter
- The two point rise in the all industry index is consistent with an increase in GDP of around 0.2% last quarter, broadly in line with our forecast of a 0.3% q/q rise
- The survey does include forecasts for the second quarter ... but firms' predictions have not been very useful in anticipating future changes in output
- . One reason is that respondents usually expect future conditions to worsen whenever they judge the current situation particularly favourable
- Nor would we place too much weight on firms' predictions for capital spending... these tend to be distorted by seasonal patterns ... revise down their forecasts between the December and April survey ... What's more, these predictions tend to lag actual capital expenditure
