The September BOJ Tankan showed an improvement in the manufacturing DI, while non-manufacturing lost momentum, prompting a cautious view of the overall picture, including small and midsize companies. Capital investment maintained growth roughly in line with the previous year, and some analysts see room for additional rate hikes as borrowing rates rise.
In the Bank of Japan’s September Tankan (Short-Term Economic Survey of Enterprises), the DI for large manufacturers rose to +24, above the previous quarter, while the DI for large non-manufacturers came in at 35, below market expectations, highlighting a slowdown in non-manufacturing. The DI for small and midsize companies was 14 in manufacturing and 15 in non-manufacturing, pointing to a cautious overall outlook.
The improvement in manufacturing DI was attributed in part to a recovery in the petroleum and coal products DI to 36, easing supply chain disruptions and the spillover from the global AI investment boom. Automobiles, however, deteriorated slightly, apparently reflecting production curbs caused by the Kumamoto earthquake and typhoons.
Capital investment was up 9.3% year on year in the September survey, exceeding the previous survey’s 8.8% increase, while capital investment plans for fiscal 2026 were described as broadly on the same trajectory as those for fiscal 2025. The Tankan survey covered the period from 26 August to 30 September, with a collection rate of approximately 99%.
From a corporate finance perspective, the bank lending DI was 13 across all company sizes and industries, while the business funding DI was +11, indicating that many companies felt they had ample access to funds. Meanwhile, the DI for perceptions of borrowing rate levels rose to 68 in September from 61 in June, suggesting that rising interest rates could gradually affect the accommodative financing environment.