Japan Business Mood Improves Amid Inflation Concerns
Japan's business mood has improved significantly in the three months to September, according to the central bank's quarterly survey. The headline index measuring big manufacturers' business sentiment increased to +24 from +22 in June, surpassing market forecasts for a reading of +25.
The BOJ's 'tankan' survey also showed that big non-manufacturers' sentiment stood at +35 after a +37 reading in June. Companies expect inflation to hit 2.6 per cent three years from now and 2.5 per cent five years from now, indicating they see inflation staying above the BOJ's 2 per cent target for an extended period.
The improved business confidence suggests that Japan's economy is weathering the impact of the Middle East conflict. The data will be a key factor in the Bank of Japan's quarterly growth and inflation forecasts due later this month, which may influence its decision on further rate hikes.