The BOJ Tankan showed an improvement in sentiment among large manufacturers, while sentiment among large non-manufacturers declined. Capital investment fell short of expectations, leaving a divergence in the pace of the domestic demand recovery.
The BOJ Tankan showed that the business conditions index for large manufacturers improved from 22.0 to 24.0, which may indicate relatively stable conditions in exports and production-related sectors. Meanwhile, the index for large non-manufacturers declined from 37.0 to 35.0, indicating that the pace of the domestic demand recovery varied, particularly in the services sector.
Capital investment by large enterprises across all industries remained high at 11.3%, but fell below the year-on-year projected figure of 12.2%, indicating a need to assess investment momentum. The BOJ Tankan presents both sides of the economy and suggests that attention should be paid to the divergence between manufacturing and non-manufacturing trends.