TOKYO (AP) — Japanese manufacturers are more upbeat aboutbusiness conditions than they were late
last year, but less so thanexpected, a central bank survey found.The Bank of Japan’s"tankan" index
for the March quarter rose to minus 8 from minus 12 forlarge manufacturers, a smaller improvement than
analysts had anticipatedbefore Monday’s release. A reading below zero means pessimistsoutnumber optimists,
and the tankan forecast for large manufacturers forthe June survey was minus 1.Large firms said they plan to
reducecapital spending in the fiscal year that begins Monday by 2 percent,suggesting manufacturers may be
unconvinced lax demand is on therebound, despite aggressive stimulus measures by the government andcentral
bank.Large nonmanufacturing companies were more positive,at positive 6, up from 4 in December. Smaller
nonmanufacturers wereless optimistic, at minus 8, up from minus 11 in the previous survey.Thecentral bank
will hold its first policy meeting under a new governor,former Asian Development Bank President Haruhiko
Kuroda, later thisweek. The weak business outlook could spur fresh moves to ease monetaryconditions,
possibly by increasing BOJ asset purchases or extending therange of maturities for the government bonds it
buys."It is anear certainty that at least one of the two Board meetings in April willresult in some
form of additional monetary easing," Capital Economicssaid in a commentary issued before the tankan’s
release.Whileincreased government spending and monetary easing appear to be givingthe economy a boost after
years of stagnation, economists saylonger-term reforms are needed to counter weakening demand due toJapan’s
aging and shrinking population and excess capacity.Kurodahas pledged to do whatever he can as central bank
governor to helpachieve a 2 percent inflation goal demanded by Prime Minister Shinzo Abeand end the long
bout of deflation, or declining prices, that hasdiscouraged companies from investing more in the domestic
economy.Thetankan survey of 10,698 companies, 98.9 percent of which responded,showed the outlook for smaller
manufacturers edging slightly lower, tominus 19 from minus 18.While public works spending will alsoraise
demand and create jobs, the government’s longer term strategy foreconomic revival after more than two
decades of stagnation hinges onconvincing both companies and consumers to spend more to boost
domesticdemand.Japan has relied heavily on export manufacturing to drivegrowth. But the economy has suffered
thanks to weak global demand due tothe financial crisis. Many manufacturers have shifted production
toless-costly overseas locations to help blunt the impact of the strongJapanese yen, reducing the potential
positive impact on exports from theyen’s weakening over the past half-year. Meanwhile, the weaker yen
hasraised costs in yen for imported energy and commodities.Copyright 2013 The Associated Press.