October 1, 2014

According to the Bank of Japan’s quarterly TANKAN business survey, sentiment among large manufacturers improved in Q3, inching up from Q2’s 12 to 13. The print came in above the reading of 10 that markets had expected. As a result, the index remains firmly entrenched above the 0-threshold, which means that optimists outnumber pessimists. Businesses’ improving mood mostly reflected a gradual recovery in exports.



Conversely, confidence in non-manufacturing industries deteriorated in Q3, decreasing from 19 in Q2 to 13, which marked the lowest reading since Q2 2013.



Despite the improvement, large enterprises in the manufacturing sector expect that conditions will deteriorate in the next three months. The forward-looking forecast index fell to 13 in Q3 (Q2: +15). Meanwhile, large manufacturers forecast that the Japanese yen will trade at 100.6 JPY per USD by the end of the fiscal year 2014 (ending March 2015).