Confidence is at high levels already, so there was little room for further gains. Companies are carefully weighing risks, which is a positive development. Production continues to increase, investment is firm, and conditions for midsize corporations are improving. All this adds to a positive outlook for the domestic economy. Additionally, the Yen remains weak, while demand in Asia is increasing. So there is lots of room for optimism.

Domestic demand is increasing gradually, overseas demand in Asia remains strong, and inventories have come down a little. But companies still see little chances to increase output prices, so risks of overheating are rather limited. On the contrary, companies are still focusing on a rather careful mix of expansion. They still have high cash balances and are increasing dividends to keep investors happy. And they continue to expand overseas in Asia where demand is increasing faster than in Japan.

Corporations see a tight labor market, and oil prices are still weighing on profits. All corporations also remain sceptical about the sustainability of the low Yen exchange rate, and they expect increasing interest rates. It also seems unlikely that household demand will increase significantly any time soon. Coming tax hikes might even result in a significant fall of domestic demand. The companies will certainly be kept on their toes.