Tetsushi Kajmoto, Leika Kihara

TOKYO (Reuters – Japanese businesses are showing signs of improvement in the last three months. The survey was conducted by the central bank on Friday. It is a clear sign that Japan’s economy is slowly recovering from the crisis caused the coronavirus pandemic.

The survey revealed that large companies plan to raise capital spending by 10.1% during the current fiscal year, ending March 2022. This is consistent with the central bank’s belief that robust corporate activity will compensate for some weakness in consumption.

Fumio Suga, the next Prime Minister Yoshihide Suga, is pleased with the results of this survey. Fumio will take over as Prime Minister and be given a mandate to lift the economy from its pandemic-induced funk and give more wealth to householders.

In the third quarter of 2013, the index measuring big-business sentiment reached plus 18, up from plus 14, according to the Bank of Japan’s closely monitored tankan survey.

Comparatively, it was for a median market prediction of plus 13.

According to the survey, sentiment indexes for large non-manufacturers grew from 1 in June to 2 in July, compared to a market consensus of a flat reading.

The survey showed that sentiment is expected to worsen in the three months ahead for big companies.

When the BOJ meets to review its rate policy on October 27-28, it will examine this survey and make revisions to its inflation and quarterly growth projections.

Japan has recovered from the devastating recession caused by last year’s pandemic by strong exports and solid global demand.

However, chip shortages and disruptions in supply caused by Asian factory closures have impacted production at Japanese factories. This could threaten Japan’s fragile recovery.

The results of the tankan survey will be closely examined by the central bank at the next meeting to decide on policy. This is Oct. 27 and 28.