MF Tokio: A Mixed Bag for Japan's Big Business
Industrial recovery in Japan spans over two consecutive quarters for the first time since recent setbacks
Take a peek at Japan's large-scale industry, and you'll notice a flicker of optimism in the business climate. The Bank of Japan's (BoJ) latest Tankan survey paints a picture of slight improvement compared to the previous two quarters. Large manufacturers have raised their sentiment index by one point, now sitting pretty at +14. Large service companies, on the other hand, have dipped a point to an astounding +33. Across the board, business conditions have inched ahead from +14 to +15. When optimists outnumber pessimists, it's a positive sign - and that's exactly what the index indicates.
Now, let's dig a little deeper. Despite the overall uptick, major manufacturers have struggled recently, with the index taking a dip to 12 in the March quarter from 14 in December. Glancing forward to April 2025, the Reuters Tankan index for manufacturers made a comeback, hitting +9, up from the previous month. But worry not, as trade tensions with the U.S. and economic weakness in China have cast shadows over the scene. That's not all – the official view on business sentiment has been toned down, now classified as "largely flat" in view of uncertainties in the global economic environment. Stay tuned as we uncover more insights on this evolving landscape.
[1] The Diffusion Index (DI) is a derived index that measures a survey's results using questions where a positive answer is scored 1 and a negative response is scored 0.DI ranges between 0 and 100.
[2] "Reuters Tankan index", Reuters, updated April 2025, https://www.reuters.com/business/tankan
[3] Corporate profits and business fixed investment data are derived from the Cabinet Office of Japan's Quarterly Reports on Japan's Economy.
[4] "Japanese Tankan Survey" official website, https://www.boj.or.jp/en/tankan/
[5] "Japan's Economy Faces Mixed Trends, According to Tankan Survey", Nikkei Asia, April 2025, https://asia.nikkei.com/Business/Japan-Economy/Japan-s-Economy-Faces-Mixed-Trends-According-to-Tankan-Survey
- The Reuters Tankan index for manufacturers in Japan has improved, gaining from -9 in the previous month to +9 for April 2025, indicating a positive trend in the finance sector of the business industry.
- Despite the overall improvement in the business climate as indicated by the Tankan survey, corporate profits and business fixed investment data suggest a more mixed trend in Japan's economy.
