Japan: Business mood improves, but near term still challenging

The latest Tankan results show that business sentiment in Japan improved in December, rising to –15 from –28 three months ago. Manufacturers saw the largest gains (+17), largely due to improved sentiment in the automotive industry, according to Oxford Economics. Sentiment for non-manufacturers also picked up, albeit at a more modest pace (+10), particularly for small firms.

Overall sentiment remains in negative territory and business forecasts point toward a renewed drop for non-manufacturers within the next three months. With the near-term outlook still difficult, Oxford Economics remains cautious.

The Bank of Japan’s December Tankan survey showed that overall business sentiment rose to –15 compared to –28 in September. Manufacturers overall saw the largest gains, with sentiment increasing to –20 from –37 before.