BOJ Survey: Japan's Manufacturers Most Optimistic Since 2018
Japan's largest manufacturers are showing their strongest optimism in over eight years, according to the Bank of Japan's quarterly Tankan business survey released on October 1st. The sentiment index for large manufacturers rose to 24 in September from 22, improving for a sixth consecutive quarter. Economists had forecasted a rise to 25.
The BOJ closely monitors this data set as it is one of its most watched. The latest survey indicates continued resilience among Japanese companies despite global headwinds like the Middle East conflict and rising oil prices. Oil prices have increased amid concerns over US-Iran negotiations.
A key factor supporting Japan's economy is sustained price and wage increases, giving businesses greater scope to raise prices after years of cost-cutting and stagnant wages. Corporate profits reached a record high in the second quarter, according to the Finance Ministry last month.
The survey will likely reinforce market expectations that the BOJ will raise its benchmark rate again by December. Former BOJ executive director Kazuo Momma sees up to a 30% chance of a hike when authorities set policy on October 30th.