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Japan corporate mood worsens in April-June, but rebound expected

Published on Jun 11, 2014 9:55 AM

TOKYO (Reuters) - Big Japanese manufacturers turned pessimistic about business conditions in April-June but expect things to improve in July-September in a sign that companies see a quick recovery from the April 1 increase in the sales tax.

The business survey index (BSI) of sentiment at large manufacturers slid to minus 13.9 in April-June from plus 12.5 in the previous quarter. However, companies anticipate the sentiment index to improve to plus 16.0 in July-September due to expectations that consumer spending will quickly rebound.

The survey, released by the government, bodes well for the Bank of Japan's closely-watched tankan sentiment index due next month and points to a declining need for further monetary easing to support the economy.

"Companies expect a slowdown in growth after the sales tax hike to be temporary because they expect consumer spending to remain strong," said Norio Miyagawa, senior economist at Mizuho Securities Research & Consulting.

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