Japan business mood reaches 8-year high, bolsters case for BOJ hikes
EWJ•Japan’s big manufacturers’ confidence index rose to +24 in September, its highest since March 2018, while companies forecast inflation of 2.6% in three years. The survey is among factors the BOJ will consider at its October meeting.
1. Manufacturer confidence rises
The Bank of Japan’s Tankan survey showed the big manufacturers’ sentiment index climbed to +24 in September from +22 in June, below the average analyst forecast of +25. Big non-manufacturers’ sentiment fell to +35 from +37, versus a forecast of +36, marking its first decline in five quarters.
2. Inflation expectations remain high
Companies forecast inflation of 2.6% in three years and 2.5% in five years, above the BOJ’s 2% target. The survey is among the factors the central bank will scrutinise as it prepares its quarterly growth and inflation forecasts this month.
3. Investment plans hold up
Big firms aim to raise capital spending by 11.3% in the financial year through March. The BOJ raised its policy rate to a 31-year high last month; the survey results showed limited effects on corporate financing conditions, according to Sompo Institute Plus senior economist Masato Koike.
