BOJ “Tankan” Shows Continued Improvement in Big Maker Sentiment

Tokyo, Oct. 1 (Jiji Press)–Business sentiment among large manufacturers in Japan improved for two consecutive quarters, apparently warmed up by a recent Japan-U.S. tariff agreement, the Bank of Japan’s “Tankan” survey for September showed Wednesday. The headline diffusion index for large manufacturers’ current business conditions rose to plus 14 from plus 13 in the previous June survey. The tariff deal is believed to have somewhat eased anxiety over economic downturn among Japanese businesses. Still, concerns over impacts of the high tariff policy of the United States linger. The recovery in sentiment is seen to be pausing also due to rising labor costs and slowing consumption reflecting higher prices. Among large manufacturers, the automotive sector’s DI rose to plus 10 from plus 8, thanks to cuts in additional U.S. tariffs on Japanese automobiles and auto parts. On the other hand, the DI for steelmakers, which continue to face 50 pct U.S. tariffs, dropped to minus 14 from minus 3. The current business condition DI for large nonmanufacturers came to plus 34, unchanged from June. The DIs for construction firms, rental and leasing companies, and others improved. But the index for the accommodations and food and beverage services sector plunged to plus 26 from plus 45, due to slowing inbound demand. The DI shows the percentage of companies seeing good business conditions minus that of firms feeling the opposite. The current business condition DI for small manufacturers came to plus 1, unchanged from June. The DI for the automotive sector slumped to minus 5 from zero, with some in the industry voicing concerns over declining shipments. The DI for small nonmanufacturers inched down to plus 14 from plus 15, falling for the second consecutive quarter. The business condition outlook DI toward December stood at plus 12 for large manufacturers and plus 28 for large nonmanufacturers, both lower than the current condition DI readings. A wide range of industries are worried about uncertainty blamed on impacts of the United States’ trade policy, according to a BOJ official. The average assumed exchange rate among all surveyed companies for fiscal 2025 came to 145.68 yen per dollar, compared with 145.72 yen in the previous June survey. Combined fiscal 2025 capital spending by large manufacturers and nonmanufacturers is forecast to increase 12.5 pct from the previous year. END [Copyright The Jiji Press, Ltd.]