Japanese business morale improves

Japanese business morale improved to the highest in more than a year but companies remain cautious about spending, a Bank of Japan survey showed, suggesting the government will not let up in its calls for more monetary easing. Expectations that raw materials costs will rise and retail prices fall also show how deflationary pressure is threatening profits as companies struggle to pass on higher costs to consumers.
The headline index for big manufacturers' sentiment improved to minus 14 in March from minus 25 in December, its best reading since the failure of Lehman Brothers shocked financial markets in September 2008, from minus 25 in December. It roughly matched a median estimate of minus 13. The improvement in the tankan survey's headline business sentiment number could be seen as easing the pressure on the central bank to further loosen its policy.