Business confidence flat among Japan’s big manufacturers

This general view shows residential and commercial buildings tightly packed in together west of the Nakano area, seen from the Shinjuku area of Tokyo, Japan, on June 12, 2024. – A key quarterly survey of Japanese businesses showed on Tuesday, October 1, 2024, no significant change in confidence levels among the country’s biggest manufacturers, while large non-manufacturers were slightly more upbeat. (Photo by Richard A. Brooks / Agence France-Presse)

TOKYO, Japan — A key quarterly survey of Japanese businesses showed on Tuesday no significant change in confidence levels among the country’s biggest manufacturers, while large non-manufacturers were slightly more upbeat.

The Bank of Japan’s Tankan survey reports the difference between the percentage of firms that see current business conditions as favorable and those that do not.

A positive figure means more businesses are optimistic. Tuesday’s headline reading among large manufacturers was plus 13, unchanged from three months earlier.

It beat market expectations of plus 12 and followed a modest uptick in the previous quarter to 13 from 11.

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Among large non-manufacturers in the world’s fourth-largest economy, the index increased from plus 33 to plus 34.

“The recovery in production at some automobile manufacturers is likely to be a boon,” Katsutoshi Inadome of SuMi TRUST said before the release of the Tankan survey.

Earlier this year, Toyota and four other top Japanese automakers were embroiled in a scandal over failing to comply with national vehicle inspection standards, which affected some domestic shipments.

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The yen’s depreciation to a near four-decade low this summer also likely “contributed to improving sentiment in the export sector,” Inadome said.

For non-manufacturers, “increasing inbound (tourism) demand and real wage growth” likely boosted business confidence, he said.

Looking ahead, “we expect that large manufacturers will see a deterioration in business conditions” in the fourth quarter of this year, according to Inadome.

“The appreciation of the yen and the depreciation of the dollar will put pressure on corporate earnings, and economic uncertainty in China is also likely to dampen confidence.”