Japan Business Confidence Q2 2016


Business sentiment stabilizes in Q2

According to the Bank of Japan’s quarterly TANKAN business survey, sentiment among large manufacturers stabilized in Q2 following Q1’s sharp deterioration, which had sent the index to a nearly-three-year low. The index was unchanged at Q1’s 6 in Q2 and came in above the reading of 4 that markets had expected. Manufacturers’ sentiment remains above the 0-threshold, which means that optimists outnumber pessimists. A strong yen and doubts about the ability of Abenomics to rekindle economic growth are holding back further improvement.

Confidence in non-manufacturing industries declined in Q2, falling from 22 in Q1 to 19 and marked the lowest reading in five quarters.

Despite growing global uncertainty and a strong yen, large enterprises in the manufacturing sector are becoming more optimistic about the country’s economic outlook in the next three months. The forward-looking forecast index rose from Q2’s 3 to 6 in Q3. Meanwhile, large manufacturers forecast that the Japanese yen will average 111.4 JPY per USD in the second half of the fiscal year 2016 (ending March 2017).

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Japan Business Confidence Chart

Japan Business Confidence Q2 2016 0

Note: Quarterly index of business sentiment. Values above 0 for manufacturers (actual result) indicate a positive assessment of the current business conditions. Values above 0 for manufacturers (forecast) indicate a positive assessment for the next quarter’s business prospects.
Source: Bank of Japan (BoJ).

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