March 31 (Bloomberg) -- The Bank of Japan’s Tankan survey will probably show business confidence improved for a fourth straight quarter, approaching levels before the global financial crisis intensified 18 months ago. The Tankan index of sentiment among large manufacturers will climb 11 points to minus 14 in March, according to the median forecast of 23 economists surveyed by Bloomberg News. A negative number means pessimists outnumber optimists. Rising confidence has spurred firms including Toshiba Corp. to boost investment after they cut spending in the aftermath of the 2008 Lehman Brothers Holdings Inc. collapse. Signs of improvement may persuade central bank Governor Masaaki Shirakawa to hold off on easing policy next week after doubling a credit program for banks in March in the fight to end deflation. “Concerns over a double-dip recession have receded considerably and corporate profits have turned up on export growth, which has improved business confidence,” said Hideo Kumano, chief economist at Dai-Ichi Life Research Institute in Tokyo and a former Bank of Japan official. “The Tankan could be used by the BOJ as evidence that the real economy is solid, if it’s asked to undertake more monetary easing.” Stocks Gain The benchmark Nikkei 225 Stock Average has advanced for seven straight weeks on signs Japan is sustaining its economic recovery. The gauge rose 0.2 percent today to 11,121.41 as of 2:20 p.m. in Tokyo. Prime Minister Yukio Hatoyama’s government has repeatedly called on the central bank to help stem deflation that threatens to stunt the nation’s recovery from its worst postwar recession. The survey may show a weaker yen and a rebound in the stock market also bolstered sentiment, according to Masahiko Hashimoto, an economist at Daiwa Institute of Research in Tokyo. Japan’s currency has fallen about 10 percent from a 14-year high of 84.83 per dollar on Nov. 27. The report is due at 8:50 a.m. in Tokyo on April 1. Higher confidence is encouraging some companies to invest or pare back cutbacks in spending plans. Large enterprises plan to cut capital spending by 0.4 percent in the fiscal year starting April 1, the least in five quarters, the survey of economists showed. Toshiba Plans Toshiba, Japan’s biggest memory-chip maker, will start construction of a flash-memory plant in July, reviving a plan　to expand production capacity that was shelved during the recession. The facility, a fifth production line at Toshiba’s manufacturing site in Yokkaichi, central Japan, will be completed by 2011, the Tokyo-based company said this month. Confidence among smaller firms is also strengthening. The Shoko Chukin Bank’s small-business sentiment index rose to a two-year high of 45.8 in March from 42.3 the previous month. A number below 50 indicates pessimists still outweigh optimists. “There’s no doubt that companies will increase spending little by little as demand in Asia is robust,” said Soichi Okuda, chief economist at Sumitomo Research Institute in Tokyo. “Yet, companies are more keen on investing in plant and equipment overseas, so a recovery in domestic investment should be gradual.” Improvements aren’t assured after reports this week indicated that the recovery is uneven. Industrial production fell in February and payroll cuts kept the unemployment rate unchanged at 4.9 percent, contrasting with data released earlier showing retail sales surged at the fastest pace since 1997 and exports advanced the most in 30 years. Wages Fall Reports today showed that wages dropped 0.6 percent in February from the same month a year before, with year-end bonuses sliding to the lowest level since the Labor Ministry’s data began in 1990. Housing starts declined 9.3 percent from a year before, and constructions orders tumbled 20 percent, other figures showed. “The worst is over for Japan’s economy, but that just means the recovery’s bud is starting to bloom,” Okuda said. “It will be difficult to see a sustainable recovery in domestic demand anytime soon.” Twelve consecutive months of consumer-price declines also show that Japan has yet to overcome deflation, which may prompt the central bank to ease policy further even as sentiment recovers. The bank doubled a lending program for commercial banks to 20 trillion yen ($217 billion) following government calls for it to do more. Shirakawa and his policy board will meet on April 6-7. Government Pressure While the Tankan won’t suggest a need for more action “the BOJ may keep its commitment to an extremely accommodative monetary stance because the government will keep pressuring them as long as prices are falling,” said Daiwa’s Hashimoto. The central bank increased the number of companies it surveys in the report, which is regarded as Japan’s mostly closely watched gauge of business confidence. Under the new sample, confidence among large manufacturers was minus 25 in December, compared with the minus 24 initially reported, and companies projected they would cut spending 12.8 percent this fiscal year. The sentiment index has been improving since hitting a record low of minus 58 in March last year. The Tankan confidence index among large service companies will improve 3 points to minus 18 in March, according to the median estimate of economists, an indication that the “worst is over” for non-manufacturers, Okuda from Sumitomo Research said.

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