Japan's Business Mood: Manufacturers Soar, Non-Manufacturers Suffer

A recent survey of Japanese businesses by the Bank of Japan (BOJ) has yielded mixed results, alleviating some pressure on the central bank to raise interest rates immediately.

The 'tankan' survey showed that manufacturers' confidence hit an eight-year high over July-September, driven in part by strong global demand for artificial intelligence and a decline in supply constraints. In contrast, non-manufacturers' sentiment fell to its lowest level in five quarters due to rising costs and stagnant sales.

The BOJ had already raised interest rates last month to 1.25%, the highest since 1990, in response to high inflation and a weak yen. With corporate inflation expectations remaining elevated but not accelerating, some experts believe that further rate hikes may be unnecessary for now.