Japan: Business sentiment hits highest level in two and a half years in Q2
July 1, 2021
Business sentiment among large manufacturers—according to the Bank of Japan’s closely watched Tankan survey—came in at plus 14 in Q2, up markedly from the plus 5 reading clocked in Q1 but marginally below market expectations of a plus 15 reading. The value is calculated by subtracting the number of respondents that say economic conditions are improving from the number of respondents that say they are deteriorating. As such, the sentiment value rose further above the zero-threshold separating pessimism from optimism regarding current business conditions, and in the process clocked the highest figure since Q4 2018.
Furthermore, confidence among large non-manufacturing firms rose to plus 1 in Q2 from minus 1 in Q1.
Regarding the outlook, sentiment among large manufacturers regarding business conditions in Q3 was plus 13, down slightly from the current reading of plus 14 but nevertheless remaining in optimistic territory. Sentiment among large non-manufacturing firms was plus 3, rising from the current reading and thus moving further into optimistic territory. As such, businesses remained relatively positive regarding operating conditions in the coming months, although fears surrounding the resurgent pandemic do seem to be weighing on sentiment.
Author: Stephen Vogado, Economist