Japan: Business sentiment declines in Q3; prospects ease
October 1, 2015
According to the Bank of Japan’s quarterly TANKAN business survey, sentiment among large manufacturers turned more cautious in Q3, with the index falling from Q2’s 15 to 12. The print came in below the reading of 13 that markets had expected. Despite the decrease, the index remains firmly entrenched above the 0-threshold, which means that optimists outnumber pessimists. Manufacturers are becoming more pessimistic due to rising concerns about the state of the Chinese economy and, domestically, slow progress on structural economic reforms.
Confidence in non-manufacturing industries was unchanged in Q3, remaining at the previous quarter’s 19, which marked the highest reading in one year and a half.
Large enterprises in the manufacturing sector expect that conditions will be less strong in the next three months. The forward-looking forecast index fell from Q2’s nearly eight-year high of 16 to 10 in Q3. Meanwhile, large manufacturers forecast that the Japanese yen will average 117.3 JPY per USD in the second half of the fiscal year 2015 (ending March 2016).