The Japanese economy seems to have hardly improved in the past three months and appears likely to slightly worsen in the next three. This dim picture is painted by the Bank of Japan's latest "tankan" survey, which sums up how business managers view their companies' performances. The economic perception gained from the quarterly report, which was released last week, is not as good as was expected.

Japan's economy continued to slowly recover for the first nine months of this year, judging from economic barometers as well as preliminary GDP figures for the third quarter of this year, July through September. Now the recovery appears to be marking time. Whether it will pick up or slow down in the months ahead remains to be seen. The key question is whether the surge of capital spending will smoothly lead to the expansion of consumer spending, the biggest engine for growth.

The tankan report is encouraging in some respects. Corporate earnings for fiscal 2000, ending March 2001, are improving. This is particularly true of current profits, a good measure of how much money a company is really making. These pretax profits are expected to rise more than 10 percent on average in all industries. Major manufacturers are looking for an average rise of 34 percent. Industry-wide capital spending is projected to increase anywhere from 3 percent to 3.5 percent.