Japanese Manufacturers See Business Sentiment Reach Highest Level Since 2018
The Bank of Japan's September Tankan survey showed a sixth consecutive quarter of improvement in business sentiment for large manufacturers, reaching an eight and a half year high. The Business Sentiment Index (DI) for large manufacturers came in at plus 24, up 2 points from the previous reading of plus 22.
This marks the highest level since March 2018, driven by expanding demand tied to artificial intelligence (AI) and semiconductors. Notable improvements were seen in production machinery, electrical machinery, nonferrous metals, and chemicals, where demand for AI-related semiconductors and data center equipment has been strong.
Progress in passing through higher raw material costs to selling prices also contributed to business sentiment. Materials-related sectors such as petroleum & coal products and steel were also robust.
However, the DI for large non-manufacturers came in at plus 35, down 2 points from the previous plus 37, marking the first deterioration in five quarters. Declines were notable in lodging and food services as well as retail, which were affected by unseasonable weather.