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Free AccessMNI: BOJ June Tankan To Show Improved Sentiment
The Bank of Japan's June Tankan survey will show improved sentiment among manufacturers thanks to the recovery in exports and production as well as the vaccination rollout but the improvement among non-manufacturers and smaller firms may not be as strong since in-person services were hit by the extended state of emergency, economists forecast.
While business sentiment is expected to continue to recover three months ahead, it will remain at low levels and companies will likely maintain their cautious outlook due to the uncertainties about the pace of vaccination, they expect.
As compared to three months ago, the Tankan is likely to show an upward revision in capital investment plans by big and small firms. Bank officials were concerned about a pause or reversal in the virtuous cycle from profit to spending following weak capital investment in gross domestic product data for the first quarter. They are especially focused on how high raw material costs and a worsening in terms of trade are affecting corporate profits and sales.
Capital investment plans by major firms will be revised up to +7.2% from +3.0% in March while the reading for smaller firms, which tend to forecast weak capex at the beginning of the fiscal year, is expected to improve to -2.3% from -5.5%.
BROAD IMPROVEMENT
The BOJ will release the results of its Tankan quarterly business survey for June conducted from early May to June 30 at 0850 JST on July 1 (2350 GMT on June 30, Wednesday).
Economists expect the diffusion index (DI) for sentiment among major manufacturers to improve to +15, up from +5 in March for the fourth straight rise. Forecasts ranged from +11 to +20. The diffusion index is calculated by subtracting the percentage of companies reporting deteriorating business conditions from those reporting an improvement. A positive figure indicates the majority of firms see better business conditions.
The median forecast for the DI for major non-manufacturers is +3 in June, improving from -1 in March. The forecasts ranged from +1 to +5.
The sentiment index for small manufacturers is projected to rise to -6 in June from -13 previously while that for small non-manufacturers is forecast to rise to -10 from -11.To read the full story
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.