Japanese business confidence hits 11-year high

Confidence among Japan's biggest manufacturers is at an 11-year high, a key central bank survey showed on Friday, as the world's number-three economy picks up pace. The Bank of Japan's Tankan report -- a quarterly survey of more than 10,000 companies -- showed a reading of 25 among major manufacturers in its December survey, the highest since its December 2006 poll. The report, the broadest indicator of how Japan Inc is faring, marks the difference between the percentage of firms that are upbeat and those that see conditions as unfavourable. The mood among major manufacturers has now risen for a fifth straight quarter. Buoyed by a favourable outlook, the firms say they plan on average to boost capital spending by 10.2 percent year-on-year, according to the survey. The index for non-manufacturers came in at 23, unchanged from the previous survey in October. This is the highest level since the final quarter of 2015. The upbeat survey underscores how Japan's prospects have been improving on the back of strong exports, with investments linked to the Tokyo 2020 Olympics also giving the economy a shot in the arm. "The strong reading reflects major manufacturers' sound performance, thanks to brisk demand in the global economy," Tsuyoshi Ueno, economist at NLI Research Institute, told AFP. However, he also noted that firms "remain cautious about various risks including geopolitical concerns over North Korea and the Middle East". The report is a boost for Prime Minister Shinzo Abe, who swept to power in late 2012 on a pledge to cement a lasting recovery in the once booming economy with a growth plan dubbed Abenomics. The scheme -- a mix of aggressive monetary easing and huge government spending along with reforms to the economy -- fattened corporate profits and sent the stock market higher. But it has failed in its goal of shrugging off the deflation that has plagued Japan for years and held back growth. Japan's latest inflation rate of 0.8 percent is still nowhere near the Bank of Japan's 2.0-percent target, despite years of record monetary easing. However, the economy expanded by 0.6 percent in the July-September period, posting its longest string of gains in more than two decades.