Tokyo Business Sentiment Update

TOKYO (Reuters) – Japanese big manufacturers’ business sentiment likely remained steady in the three months to September, while non-manufacturers’ confidence saw a slight decline, according to a Reuters poll released on Friday. This shift reflects concerns over the global economic slowdown.

The Bank of Japan’s (BOJ) quarterly tankan business sentiment survey is anticipated to show that the headline index for big manufacturers’ confidence remains at +13 in September, unchanged from June, based on a poll of 16 economists.

Economists at the Daiwa Institute of Research noted that “China’s economic slowdown and the impact from typhoons weighed on the business sentiment of big manufacturers,” although an uptick in auto production has bolstered morale.

The sentiment index for big non-manufacturers is expected to dip slightly but remains solid at +32 in September, down from +33 recorded in the June survey. Analysts indicated that while strong demand and wage recovery supported service-sector sentiment, labor shortages and natural disasters adversely affected their outlook.

Big companies are likely to increase their capital spending plans by 11.9% for the fiscal year ending in March 2025, a rise from the 11.1% projected in the June survey.

Confidence among both big manufacturers and non-manufacturers regarding future outlook may ease slightly, as suggested by the poll.

The BOJ will release its tankan survey at 8:50 a.m. on October 1 (2350 GMT on September 30).

Markets are keenly observing the timing and pace of future rate hikes by the BOJ following the central bank’s decision to keep short-term interest rates unchanged.

Additionally, separate data is expected to show that the Tokyo-area core Consumer Prices Index (CPI), which excludes volatile fresh food prices, increased by 2.0% year-on-year in September, down from 2.4% in August, as the poll indicated.

The government will announce the consumer inflation data for the Tokyo area on September 27.