Japan Businesses In Deep...

<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[View Slideshow: More Gloom Confidence among Japanese manufacturers remains near record lows and service-sector sentiment hit an all-time low as the economy skids deeper into recession amid global economic crisis, a Reuters poll showed on Tuesday. The fall in service-sector sentiment signals that the world's second-biggest economy, already battered by a slump in exports, is also losing support from domestic demand. The February results for the Reuters Tankan, a monthly poll that tracks the Bank of Japan's tankan quarterly survey, also showed that most firms remain pessimistic about business conditions in the next three months, although manufacturers and service-sector companies expect a slight improvement. The poll heralds further big contraction in the Japanese economy, a day after the government reported that gross domestic product sank in the last quarter by its most since the first oil crisis in 1974. &quot;Demand for Japanese cars, digital electrical appliances, and machine tools has been hit the hardest by the global slump in high-priced goods and capital spending and the slump will drag on,&quot; said Azusa Kato, an economist at BNP Paribas. &quot;That shatters any hopes for an export-led recovery for Japan in the foreseeable future.&quot; Kato expects the economy to shrink 11.3 percent in the first quarter, if industrial output drops by further 20 percent as expected by manufacturers, and to remain mired in recession until April-June 2010. Illustrating weakness in capital spending, which had been a main driver behind an export-led growth in recent years, the survey showed nearly two thirds of surveyed firms forecast a drop in their business expenditures in the fiscal year from April 1. Barely one out of 10 saw increase in capital spending. Japan's Nikkei stock average fell 1.4 percent on Tuesday to a nearly four-month closing low, as financial shares such as banks and property firms slid on continued credit worries. The Reuters Tankan, a poll of 400 major firms of which 214 responded, showed manufacturers' sentiment edged up 2 points to minus 74 in February from minus 76 in January, which was the lowest reading since the survey began in June 1998. Boding&nbsp;ill For BOJ The survey suggested that the sentiment gauge in the BOJ's forthcoming quarterly tankan due on April 1 could plunge to match a low hit in 1975. The last central bank survey in December showed the index at its lowest in nearly seven years. The sentiment index in the electric machinery and autos/transport equipment sectors -- two leading industries in Japan -- edged up only by 2 points to minus 76 and 1 point to minus 88, respectively. &quot;We've seen a halt in orders from major markets including automobiles, semiconductors and liquid-crystal displays,&quot; an electric machinery firm said in the survey, conducted between Jan. 26 and Feb. 12. &quot;We can't see when they will recover.&quot; Sentiment among non-manufacturers worsened 8 points to a record low with sentiment in the property sector falling sharply. &quot;The volume of work has fallen sharply as real estate developers went under due to the fallout from the U.S. subprime mortgage problems and jittery financial markets,&quot; said one construction firm in the survey. Japan's heavy dependence on exports and persistently soft domestic consumption has led to a sharper contraction than in other major economies, even though the country has escaped much of the direct fallout from the credit crisis. The index readings for the Reuters Tankan are derived by subtracting the percentage of respondents who say conditions are poor from those who say they are good. (Reuters)