Prime Highlights
- Japan’s tankan survey shows business sentiment rising for a fifth straight quarter, with the index climbing to 22 from 17.
- The Bank of Japan raises its benchmark rate to 1 per cent, a three-decade high, amid steady economic confidence.
Key Facts
- The index for large non-manufacturers rose to 37 from 36 in the previous survey.
- Fixed investment plans remain strong for large and mid-size Japanese firms, according to Amova Asset Management.
Background
Business sentiment among major Japanese manufacturers has improved for a fifth straight quarter, according to the Bank of Japan’s latest quarterly tankan survey.
The survey’s diffusion index rose to 22 from 17 in the previous quarter, reflecting a steady climb in confidence among the country’s largest manufacturers. The index for large non-manufacturers, including service sector companies, also edged higher, rising to 37 from 36 in the last survey.
The diffusion index measures the gap between companies expecting favourable conditions and those expecting unfavourable ones and the continued rise points to sustained optimism across Japan’s business landscape.
A weaker yen has boosted the value of export earnings once converted back into yen, offering a strong advantage to Japan’s major exporters and supporting overall sales performance.
Analysts note that sales remain particularly firm among large enterprises, with fixed investment plans also staying strong for both large and mid-size firms.
The Bank of Japan raised its benchmark interest rate to 1 per cent last month, marking a three-decade high, as part of its ongoing effort to normalise monetary policy after years of maintaining rates near or below zero. The move reflects growing confidence in the broader economic outlook.
Naomi Fink, Chief Global Strategist and Chief Economist at Amova Asset Management, said sales remain firm, especially among large enterprises, and noted that fixed investment plans continue to show strength among larger firms.
