REFILING: LEAD: April-June big business confidence hits yet another ...

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The official said the latest results confirmed the government'sassessment of the corporate sector in its latest monthly report,which said business confidence in Japan "has becomeincreasingly cautious."

The index is compiled by subtracting the percentage of companiesreporting deteriorating business conditions from that of firmsreporting improving conditions.

Yoshiki Shinke, senior economist at the Dai-ichi Life ResearchInstitute, said that the latest survey confirmed that soaring crudeoil and other raw material prices have "seriouslybattered" the Japanese corporate sector.

Shinke said the results indicate that the Bank of Japan's Tankanquarterly survey due out July 1 will show a major decline in thesentiment of large manufacturers.

"The Tankan DI may drop to 2 or 3 from 11 in the previousMarch survey and could fall into negative territory," he said.

Sixteen private-sector economists polled by Kyodo News expect theBOJ's forthcoming Tankan survey will show that the businesssentiment diffusion index for large Japanese manufacturers willfall to an average of 3 from 11 in the previous poll released April1.

The index of 3 means the percentage of major Japanese manufacturersreporting favorable business conditions is 3 points more than thatof those reporting unfavorable conditions.

Looking ahead, the joint survey said the business confidence indexfor large companies is projected to improve in the coming quartersto reach 3.7 in the July-September period and 5.7 in theOctober-December quarter.

Companies of all sizes project a 2.0 percent dip in their pretaxprofits in fiscal 2008 from fiscal 2007, a turnaround from a 6.0percent growth forecast in the January-March period, weighed downby higher raw materials costs.

The survey also showed companies in all industries project a 0.9percent decline in capital investment in fiscal 2008 from theprevious year, an improvement from a 9.4 percent fall projected inthe previous poll.

In the April-June period, the business confidence index for largemanufacturers stood at minus 15.1, down from minus 12.9 theprevious quarter.

Business confidence deteriorated among makers of general machinery,vehicles and precision instruments, on raw material price surgesand the stronger yen, which trims exporter profits, the FinanceMinistry official said.

The index for large nonmanufacturers was minus 15.3, down fromminus 7.2 in the previous poll, with declines in the construction,information technology and wholesale sectors.

The indexes for large manufacturers and nonmanufacturers each hitrecord-low levels for the second straight quarter, the officialadded.

For midsize companies capitalized at 100 million yen or more butless than 1 billion yen, the all-industry business confidence indexsank to minus 18.1, also a record-low, from minus 14.1 in theJanuary-March quarter.

The index for small companies -- capitalized at 10 million yen ormore but less than 100 million yen -- tumbled from minus 30.4 inthe previous quarter to minus 36.5, also logging a record-lowfigure for the second straight quarter.

As for capital investment, manufacturers plan to spend 9.3 percentmore in fiscal 2008 than in fiscal 2007, but nonmanufacturers planto cut such spending 8.2 percent.

The survey, conducted May 25, covered 14,980 companies, of which78.4 percent responded.

Copyright ? 2008 Kyodo News International, Inc.

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