The September BOJ Tankan showed that price pass-through by large manufacturers was beginning to reach a ceiling, while demand related to AI remained strong. It also set out the market’s main points of focus regarding future price expectations and interest-rate trends.
In the September BOJ Tankan, the response cutoff date was 9 September, and approximately 70% of respondents had replied. The business conditions DI for large manufacturers continued to improve, reaching its highest level in eight and a half years, while non-manufacturers deteriorated for the first time in five quarters, showing a clear divergence between manufacturing and non-manufacturing. Large manufacturers reported strong earnings and capital investment, supported by demand for AI and semiconductors.
The selling-price DI for large manufacturers was expected to remain flat both at present and ahead, which was noted as a possible sign that the stance on price pass-through had reached a ceiling. Companies’ price expectations pointed to a decline of approximately 0.1% both one year and five years ahead across all industries and company sizes.
Capital investment plans were revised slightly downward by large companies and upward by small and medium-sized companies, suggesting a pattern similar to the previous year. Regarding the interaction between wages and prices, it was considered necessary to carefully assess developments surrounding the anchoring of inflation expectations, with future reports of price increases expected to be important.
While lending-related indicators showed no major changes in the assessment of monetary easing, the borrowing-rate level DI rose. The December Tankan will need to be reviewed to reassess the impact of the policy rate and trends in companies’ financial positions. Attention was also drawn to the impact of the BOJ’s pace of rate hikes and exchange-rate trends on the market.