Bank of Japan business survey shows tepid outlook

TOKYO - Japanese businesses are cautious over prospects for a recovery, according to a quarterly central bank survey released yesterday that showed a mixed outlook for the world's third-largest economy.

The results of the Bank of Japan's "tankan" highlight the challenges Prime Minister Shinzo Abe faces following a landslide election victory Sunday.

The leading measure of business sentiment showed a slight deterioration in overall expectations among manufacturers. More than two-thirds of the large and medium-sized companies surveyed said they viewed the outlook for the coming quarter as "not so favorable."

Japanese businesses anticipate weak demand both at home and overseas for their products and higher costs for materials thanks to the weakening Japanese yen.

Japan's economy slipped into recession after a sales tax hike in April chilled demand, stalling the recovery. Abe delayed a tax hike due for 2015 to avoid further disruption to growth, and has said he will push ahead with reforms to end two decades of stagnation.