Japan: Business sentiment hits over three-year high in Q2
July 3, 2017
According to the Bank of Japan’s quarterly Tankan business survey, sentiment among large manufacturers jumped to the highest level since Q1 2014. The index rose from 12 in Q1 to 17 in Q2, exceeding the reading of 15 projected by a median market forecast. The Tankan's business survey is calculated by subtracting the number of respondents who say economic conditions are improving from those who say they are deteriorating. A positive reading means optimists outnumber pessimists.
Confidence in non-manufacturing industries rose from Q1’s 20 to 23 in Q2, which represents the highest value in over a year.
Manufacturers’ sentiment is increasing as the economy is benefiting from higher demand for Japanese goods and a weak yen, while a strong labor market is supporting domestic demand. As a result, the forward-looking indicator for the next three months rose from the last quarter’s 11 to 15, which represented the highest level in two years.
Meanwhile, large manufacturers forecast that the Japanese yen will average 108.3 JPY per USD in the second half of the fiscal year 2017 (ending March 2018).