Mizuho notes upbeat manufacturers
Mizuho senior economist Hidenobu Tokuda said companies are upbeat but cautious about the future.
"This reflects concerns about emerging markets," he said. "This is also due to concerns about the domestic economy, because consumer spending has been somewhat disappointing."
He noted that capex forecasts were strong but much of it has been delayed until the second half of the fiscal year.
"I think the economy will continue to recover, but the pace will be slow because we are still in an inventory adjustment phase," he said. "I think the BOJ could ease in January as wages are not likely to rise fast enough to satisfy the BOJ's price target."
Junko Nisioka, chief economists at Sumitomo Mitsui focused on the weakness in the outlook and said the economy "lacks recovery momentum."
"Today's Tankan per se is seen as neutral to the BOJ's monetary policy decision but market expectations for further easing will remain intact as there is still distance from the central bank's 2 percent inflation target," he said.
"Given the upward revision in the latest GDP, the macro economic environment is not so bad ... but if the yen sharply rises and share prices dive, and inflation expectations worsens, there is a chance for BOJ easing."
There has been virtually no market reaction to the Tankan report.