Japan's industry gloom deepens

Tokyo, Oct 1 (DPA) Optimism in Japan's industry is at its lowest point in five years, a quarterly survey by the country's central bank said Wednesday.

For the first time since 2003, the Bank of Japan's Tankan index, a business sentiment survey of 10,000 companies, turned negative in the July-September quarter.

The index slipped from plus five in the previous quarter to minus three, indicating that pessimists have the upper hand as the global downturn threatens Japan's export markets and the country's economy hovers on the brink of recession.

The companies expect the index to decline further to minus four in the next three months.

Considering that many companies responded to the survey before the crisis in the global financial markets deepened in mid-September with the bankruptcy filing of Lehman Brothers Holdings Inc, corporate sentiment is likely to have deteriorated even further.

The companies surveyed said their capital spending will grow by a slim 1.7 percent this fiscal year which ends in March 2009, down from 4.9 percent in the previous year and below the market's median forecast for a 2.5 percent rise.

Business sentiment has been worsening amid the global economic slowdown and financial market turmoil, which have pushed Japan's economy to the brink of recession

The Tankan index is calculated by subtracting the percentage of companies who regard business conditions as unfavourable from those that consider them positive.