By Stanley White
TOKYO (Reuters) - Big Japanese manufacturers turned pessimistic in April-June because of rising car inventories and a glut of steel, but sentiment is expected to bounce back in the following quarter as consumer spending supports expectations for stronger growth.
The quarterly poll by the Ministry of Finance and the Cabinet Office released on Thursday suggests growth could slow temporarily in the second quarter as car makers curb production to draw down inventories.
The business survey index (BSI) of sentiment at large manufacturers stood at minus 6.0, compared with plus 2.4 in January-March. The sentiment index is seen improving to plus 13.2 in the third quarter.
The survey also showed that retailers are more confident as shoppers spend more and that firms are ready to increase capital expenditure, suggesting the economy will accelerate later this year.
Policymakers consider strong consumer spending and business investment essential ingredients to achieving a self-sustainable recovery and triggering the price growth needed to meet the Bank of Japan's inflation target.
"Economists were already expecting a slowdown in the second quarter due to high levels of inventories seen in the first quarter," said Hidenobu Tokuda, senior economist at Mizuho Research Institute.
"This is nothing to be pessimistic about. Any slowdown will be temporary. Growth will quickly pick up pace."
Japanese firms plan to raise capital spending by 5.9 percent in the business year that started in April, the survey also showed, which compares with a 3.9 percent decline seen in the previous poll.
Capital spending and wages are essential for the success of Japanese Prime Minister Shinzo Abe's reflationary policies known as "Abenomics", but last year companies were slow to implement their business investment plans due to uncertainty over the growth outlook.
The latest survey follows an unexpected rise in a leading indicator of capital expenditure and an upward revision to economic growth in the first quarter due to strong business investment.