Japan 7~9 Major Companies Sentiment Index 18 ... Up 4P from Previous Quarter

[Image source=AP Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] The business sentiment index (DI) for large manufacturing companies in Japan, reflecting the perceived economic conditions from July to September, was recorded at plus 18. This marks a 4-point improvement from the previous quarter's plus 14.

On the 1st, Nihon Keizai Shimbun reported this citing the Bank of Japan's announcement of the September nationwide large enterprise Tankan survey (Tankan index). The Tankan index has improved for five consecutive months.

Thanks to increased demand mainly in domestic and international information and communication technology (IT), the perceived economic conditions have generally improved, but supply constraints of raw materials such as semiconductor shortages are seen as burdens.

The business sentiment DI, which assesses business conditions, is calculated by subtracting the percentage of companies responding 'bad' from those responding 'good' regarding their perceived economic conditions. This survey was conducted from August 26 to September 30. During this period, a state of emergency was declared in 19 prefectures including Tokyo.

The DI for large manufacturing companies exceeded the median of private forecasts compiled by QUICK, a market research specialist, which was plus 13. In June 2020, when COVID-19 spread, it fell to minus 34 but has been continuously improving since then. In the September survey, 11 out of 16 major industries showed improvement. IT demand supported the improvement along with paper and office machinery. Meanwhile, due to the spread of COVID-19 in Southeast Asia causing supply constraints for parts, the automobile sector dropped 10 points from the previous quarter to minus 7 points.

The DI for large service companies rose slightly to plus 2 from plus 1 in the previous quarter. It has improved for five consecutive quarters but has not reached pre-COVID-19 levels.

Due to behavioral restrictions following the state of emergency declaration, the accommodation and food service sectors remained flat.

Among 12 major industries, only 4 showed improvement. Business-to-business services improved significantly due to demand related to Tokyo Olympic security and other factors.

This content was produced with the assistance of AI translation services.