New Delhi

Japanese manufacturers were more positive about business conditions in October, according to a Reuters monthly poll on Wednesday, though they remain cagey about the speed of economic recovery in China.

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Sentiment in the service sector eased, as the survey reflected, presenting Japan with uneven economic conditions.

The Reuters Tankan, closely tracking the Bank of Japan's quarterly business survey, showed the sentiment index for manufacturers was at plus 7 in October, up from plus 4 in September.

In the latest poll, 506 major non-financial firms were surveyed, with 241 companies responding anonymously between Sept. 25 and Oct. 4.

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China, Japan's second-largest export market after the U.S., began announcing aggressive economic stimulus efforts on Sept. 24.

A wide cross-section of Japanese industries said business sentiments brightened, and in increases, it was led by chemicals and food industries.

"We are seeing a stronger-than-expected rebound in the electronics materials sector," a chemicals maker manager said in the poll.

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Memory chip makers, in particular, have been selling well, according to a manager at an electronics firm.

Manufacturers expect their business sentiment to rise further to plus 9 in the next three months, said the survey.

However, managers across multiple sectors voiced concerns about the weak Chinese economy.

"Our clients are growing cautious about raising capital expenditures due to a Chinese economic slowdown," a machinery maker manager said.

The Reuters Tankan service-sector index fell for the fourth straight month in October to plus 20, from plus 23 in September, with both the transport and wholesale sectors experiencing the sharpest decline in sentiment. It was also the lowest since February last year.

"We have been unable to fully pass on higher energy costs and currency impacts to pricing," a wholesaler manager wrote.

Other factors mentioned by non-manufacturers were the slowing Chinese economy, unpredictable weather, and a stronger yen.

Despite this, service sector firms expect the index to rebound to plus 22 in January as a result of good investment in information systems and foreign tourist spending.

The Reuters Tankan indexes are achieved by subtracting the percentage of pessimists from the optimistic ones. A positive figure indicates optimists outnumber pessimists.