Hopes Growing for Full Economic Recovery.

(From Journal of Japanese Trade & Industry (JJTI))

The Tokyo stock market surged ahead in September amid growing expectations that Japan's economy is headed for a full-fledged recovery, lifting its key gauge, the 225-issue Nikkei Stock Average, above the 11,000-yen level for the first time in a year and three months. Foreign investors continued to put their funds into Japanese stocks, resulting in heavy trading that often swelled to a daily turnover of more than 1 billion shares.

Against that background, business sentiment has somewhat improved. A Kyodo News survey covering 100 major Japanese companies found that the proportion of business executives who think the economy is in recession declined while more than 80% believe economic activity is leveling off. There appear to be two factors behind the improvement in business confidence. One is progress in workforce cuts and other streamlining measures that have helped earnings prospects to turn for the better. The other is the stock market rebound that has boosted business psychology.

According to a survey on economic activity announced in September by the Japan Association of Corporate Executives (Keizai Doyukai), 40.8% of those polled believed the economy is more or less expanding. This represented a steep rise of 38.6 percentage points from the previous survey taken in June. "Economic activity as felt by business executives is moving in the right direction," the association's chairman, Kitashiro Kakutaro, told a press conference. "I think the Japanese economy may have reached a turning point more than a decade after the collapse of the bubble economy."

Given these developments, the government released a monthly economic ...