Japan Manufacturer Confidence Up This Month, Recession Likely Avoided In Q3: Report

Japan's manufacturing confidence rose for the first time in four months, according to a Reuters survey, suggesting the economy may be coming out of recession. However, On Sunday, the economy minister and another poll indicated the country may not even be in recession. A recession would be a blow to Prime Minister Shinzo Abe and Bank of Japan Governor Haruhiko Kuroda's efforts to boost growth since 2012.

The Reuters Tankan sentiment index for manufacturers rose to 9 in December from 3 in November. Respondents' confidence level was little changed when looking ahead, with the index at 10 for March 2016. As many as 259 of 514 companies responded in the Nov. 20 to Dec. 20 poll. The monthly survey is considered a window on the Bank of Japan's quarterly Tankan report, which is due next week.

"Domestic orders are in a moderate recovery trend but sales and profits take time to recover due to the decline in orders from emerging Asian countries," Reuters reported a manager at a machinery maker as saying in the survey, which companies answer anonymously.

The service sector index, while higher, fell from 22 to 18.

"The service sector reflects weak private consumption," Reuters reported Yuichiro Nagai, economist at Barclays Securities, as saying. "This survey backs our view that the economy's rebound will be tepid in the current quarter."

For the July to September quarter, economists predict the revision due from the government Tuesday will show a 0.1 percent economic expansion instead of the previously released 0.8 percent contraction. That would mean the economy didn't have two quarterly contractions in a row -- the common definition of a recession.

Economy Minister Akira Amari said Sunday that he expects Japan's revised gross domestic data to show zero growth in the July-September quarter, on annualized basis, which would be an improvement on the contraction shown by the preliminary data.

"I think revised (GDP) data will probably be zero and the economy will grow positive thereafter," Reuters reported Amari as saying. "Japan is on a steady recovering trend."