Tankan shows fundraising woes mixed with a surplus of equipment and workers

December 15, 2008
By Ken Worsley

Earlier this morning, the Nikkei opened its article concerning today’s Tankan figures with a flurry: “The Bank of Japan’s latest tankan survey made it clear that companies are finding it increasingly difficult to raise funds, and are carrying more equipment and workers than necessary.”

According to the survey, which was released this morning by the Bank of Japan, the diffusion index measuring confidence at large firms fell 16 points to -16, while the score fell 12 points to -22 at medium-sized firms, and dropped 7 points to hit -28 amongst small enterprises.

Amongst manufacturers of all sizes, the diffusion index fell 14 points to -25. At non-manufacturers, the score slid 7 points to -23. Amongst all firms of any size in any industry, the diffusion index fell 10 points to -24.

We can expect to see pressure put on the Bank of Japan to lower interest rates even further, though there isn’t much wriggle room down from 0.3%. Some commentators expect to see a return of the Zero Interest Rate Policy that was abandoned in an attempt to return to “normalcy.”

Unfortunately, we are bound to see further waves of job cuts and pullbacks in capital spending. It’s not quite yet time for normalcy.

Filed Under Bank of Japan, Economic Reports, Tankan