The large manufacturers' business sentiment DI in the September Tankan survey released by the Bank of Japan exceeded the previous reading, reaching its highest level in about 8.5 years. Improvement in the non-manufacturing sector slowed, while optimism about the outlook receded somewhat in both manufacturing and non-manufacturing. Views have spread that the results will provide underlying support for expectations of a rate hike this year.
The Bank of Japan released its September Tankan, or Short-Term Economic Survey of Enterprises in Japan. The large manufacturers' business sentiment DI rose to plus 24, improving from plus 22 in the previous survey and reaching its highest level since March 2018, but falling short of the market forecast of plus 25. Petroleum and coal products and steel showed particularly notable improvement. The outlook is for deterioration, with the DI expected to fall to plus 21.
The DI for large non-manufacturers was plus 35, deteriorating for the first time in 5 quarters. The market forecast was plus 36, which was slightly higher. Hotels, restaurants and other accommodation and food services deteriorated, and the outlook is also for deterioration, with the DI expected to fall to plus 30.
The BOJ Tankan focuses not only on corporate business sentiment but also on price expectations. The year-on-year increase in the CPI was projected at 2.6% in 1 year, 2.6% in 3 years and 2.5% in 5 years. Capital investment plans for fiscal 2026 were up 11.3% year on year, revised downward from the previous survey and below the market forecast of a 12.2% increase.