MNI: BOJ Tankan: Key Sentiment Rises, Solid Capex Plans
MNI (TOKYO) - Benchmark business sentiment rose over the last three months, but sentiment for major non-manufacturers posted its first drop in two quarters, the Bank of Japan’s December Tankan business sentiment survey showed Friday.
Capital investment plans by major firms and smaller firms this fiscal year remained firm and were above average, supporting the BOJ's view that the virtuous cycle from income to spending continues.
The diffusion index for sentiment among major manufacturers stood at +14 in December, up from +13 in September, the highest level since March 2022. The index is likely to fall to +13 in March.
The sentiment index for major non-manufacturers fell to +33 in December from +34 in September, the first drop in two quarters and the lowest level since June 2024. The index is projected to fall to +28 three months ahead.
The sentiment index for smaller manufactures stood at +1 in December, up from zero in September, for the second straight rise. The index is expected to be zero in March.
The sentiment index for smaller non-manufacturers stood at +16 in December, up from +14 in September, for the second straight rise and for the highest level since August 1991. The DI is projected to fall to +8 in March.
Business investment plans by major firms this fiscal year, key to a pickup in domestic demand, are projected to rise 11.3% y/y, above the historical average. Capex plans of smaller firms are expected to rise 4.0% this fiscal year, also above the historical average, while plans by smaller firms tend to be revised up after the negative forecast at the beginning of the fiscal year.