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Japan Tankan keeps manufacturers upbeat, services sentiment softens

Japan’s manufacturers’ index held at plus-13, while the non-manufacturers’ index fell to plus-25, citing higher costs from a weak yen and rising rates plus Middle East uncertainty.

Reported · Written up by our desk · Central Banks

Japan’s latest Reuters Tankan survey showed a split in business mood, with manufacturers holding steady while non-manufacturers cooled as cost pressures and Middle East risks weighed on service confidence. Forexlive summarized the monthly survey as a key lead indicator ahead of the Bank of Japan’s next quarterly Tankan report.

The manufacturers’ index was unchanged in July at plus-13 from June, supported by solid semiconductor demand and expanding orders for products used in chip applications and AI servers. The survey also pointed to rising demand for electronic components broadly, alongside indications that capacity constraints were becoming a concern at some firms.

On the services side, the non-manufacturers’ index eased to plus-25 from plus-32, as managers cited higher costs tied to a weak yen and rising interest rates, along with uncertainty related to the United States, Israel, and Iran conflict. The outlet noted that while signs of resolution were beginning to emerge, the situation had not fully recovered.

Forexlive also reported that the survey was conducted from July 1 to 10, drawing responses from 218 of 511 firms polled. The data underscore how the BOJ’s rate decision debate may hinge less on near-term sentiment shifts and more on whether price increases from costs become entrenched.

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