Japan: Business sentiment remains positive in Q4
Business sentiment among large manufacturers—according to the Bank of Japan’s closely watched Tankan survey—came in at plus 18 in Q4, thus matching the reading clocked in Q3 and marginally above market expectations of a plus 13 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 remained above the zero-threshold separating pessimism from optimism regarding current business conditions and, in the process, clocked the joint-highest figure since Q4 2018.
Furthermore, confidence among large non-manufacturing firms rose to plus 9 in Q4 from plus 2 in Q3.
Regarding the outlook, sentiment among large manufacturers regarding business conditions in Q1 2022 was plus 13, down slightly from the current reading of plus 18 but nevertheless remaining in optimistic territory. Sentiment among large non-manufacturing firms was plus 8, slightly down from the current reading but remaining in optimistic territory. As such, businesses remained relatively positive regarding operating conditions in the coming months.
However, the readings likely underplay the effect of the Omicron variant, with around 80% of respondents having submitted their readings in late November before the new variant was flagged as a concern.