Japan's economy continues to pick up momentum

TOKYO Japanese business confidence improved for a fifth straight quarter in the three months to December to hit an 11-year high, a central bank survey showed, a sign the economy is gathering momentum from robust exports and booming corporate profits.

But big manufacturers and non-manufacturers expect business conditions to worsen soon, highlighting their reluctance to embrace the improved operating environment via increases in wages and investment.

Nudging cash-rich companies into spending more on wages has been a priority for Prime Minister Shinzo Abe's efforts to vanquish the deflation that has plagued Japan for nearly two decades.

As part of those efforts, Mr Abe's ruling coalition approved a plan on Thursday to slash the corporate tax rate - but only for companies that increase spending - a move that could brighten business sentiment in coming months.

The closely watched survey, conducted by the central Bank of Japan, showed capacity constraints and staff shortages were increasing price pressures. - REUTERS