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Economy in Brief

Japan Tankan Survey Drops Sharply
by Robert Brusca December 15, 2008

Japan’s Tankan for 2008 Q4 shows dramatic weakening. The headline pace for large enterprises in manufacturing has dropped to -24 from -3 in 2008-Q4. Non MFG has turned negative to -9 in Q4 from +1 in Q3. The all industries index is at -16 in 2008-Q4 down from flat in 2008-Q3. Of the main sectors, Construction. Real estate, Wholesaling, Retailing, Transportation, Services for businesses, Personal services and Restaurants and hotels all are on their weakest respective readings since 2003-Q3 except Construction. That sector reading lies in the bottom quarter of its range.

Even construction is weak as its average has been a reading of -3.0 while its actual reading in 2008 Q4 is -10. Manufacturing’s average score has been -13.5 and that is now at -24.0.

The manufacturing outlook has also deteriorated. The Q1 outlook if for a reading of -36 compared to an outlook for -4 for 2008-Q4. Similarly for Nonmanufacturing the outlook has slipped to -14 in 2009-Q1 from what was -1 for 2008-Q4.

The outlook and current assessments for small and medium-sized firms is just as bad or worse. In Japan the large enterprise survey is the bellwether.


Tankan Results Large Enterprises
  Readings Averages PERCENTILES
  Q4-08 Q3-08 Q2-08 Q1-08 1-Y Avg Since Q3'03 Since Q1'04
MFG -24.0 -3.0 5.0 11.0 -13.5 16.3 0.0%
Nonmanufacturing -9.0 1.0 10.0 12.0 -4.0 13.8 0.0%
Total Industry -16.0 0.0 7.0 12.0 -8.0 15.1 0.0%
Construction -10.0 -7.0 -1.0 -9.0 -8.5 -3.8 22.2%
Real Estate -7.0 5.0 22.0 21.0 -1.0 29.2 0.0%
Wholesale -7.0 11.0 12.0 14.0 2.0 17.5 0.0%
Retail -18.0 -5.0 0.0 0.0 -11.5 4.5 0.0%
Transportation -7.0 6.0 16.0 17.0 -0.5 13.9 0.0%
Services for Business -1.0 4.0 20.0 22.0 1.5 22.2 0.0%
Personal Services -11.0 6.0 10.0 13.0 -2.5 9.6 0.0%
Restaurants & Hotels -32.0 -13.0 -14.0 -3.0 -22.5 4.5 0.0%
Forecast
  Q1-09 Q4-08 Q3-08 Q2-08 1-Y Avg Since Q3'03 Since Q1'04
Manufacturing - Outlook -36.0 -4.0 4.0 7.0 -7.3 13.6 0.0%
Nonmanufacturing - Outlook -14.0 -1.0 8.0 13.0 1.5 13.2 0.0%
All Industry-Outlook -25.0 -2.0 6.0 10.0 -2.8 13.3 0.0%
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