2017.12.1500:29:00UTC+00Japanese Large Manufacturers' Sentiment At 11-Year High

Confidence among Japanese large manufacturers increased for the fifth straight quarter to an 11-year high at the end of 2017, as strong exports and rising corporate profits underpin activity, a closely watched survey showed Friday.

The large manufacturers' sentiment index rose to 25 from 22 a quarter ago, according to the quarterly Tankan survey from Bank of Japan. This was the highest score since the end of 2006.

At the same time, the large non-manufacturers' sentiment indicator held steady at 23 in the fourth quarter.

However, both big manufactures and non-manufacturers forecast conditions to weaken in the next quarter. The outlook index among manufacturers came in at 19 and that in non-manufacturing at 20.

Large enterprises among all sectors plan to raise their fixed investment in the year through March 2018. Fixed investment is forecast to rise 7.4 percent compared to a 2.1 percent fall for FY 2016.

Further, data showed that the small manufactures' sentiment index improved to 15 from 10 in the September quarter. At the same time, the small non-manufacturers' confidence indicator rose slightly to 9 from 8.

All enterprises reported labor shortages with the index easing to -31 from -28. The survey was conducted among November 14 and December 14.

Marcel Thieliant, an economist at Capital Economics, said Tankan survey showed that business conditions didn't improve much further this quarter which suggests that growth is now slowing.

Nonetheless, capacity and staff shortages continue to intensify and price pressures are strengthening, the economist added.