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JAPAN DATA: Tankan Beats Expectations, Capex Outlook Firms

JAPAN DATA
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Japan's Q4 Tankan survey was mostly above market forecasts. The large manufacturing index at 14, versus 13 forecast (which was also the prior outcome). The outlook was at 13, versus 12 forecast and 14 prior. For large non-manufacturers we were at 33 and the outlook at 28, both in line with consensus. All industry capex was 11.3%, versus 10% forecast and 10.6% prior. 

  • For smaller firms, we were better than expected. On the manufacturing side, we edged up to 1 (versus a -1 forecast), while the outlook was flat versus a -1 forecast. For non-manufacturing we rose to 16 from 14 prior and 12 forecast. This was the highest read since the early 1990s.  The outlook was 8, against an 11 forecast for these firms.
  • Broadly the improvement or elevated nature of conditions for larger firms suggests a supportive GDP growth. The chart below plots the current index levels for large firms (manufacturers in white, non in green) against y/y GDP growth. 

Fig 1: Tankan Large Firm Index Levels Versus Japan Real GDP Y/Y 

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Japan's Q4 Tankan survey was mostly above market forecasts. The large manufacturing index at 14, versus 13 forecast (which was also the prior outcome). The outlook was at 13, versus 12 forecast and 14 prior. For large non-manufacturers we were at 33 and the outlook at 28, both in line with consensus. All industry capex was 11.3%, versus 10% forecast and 10.6% prior. 

  • For smaller firms, we were better than expected. On the manufacturing side, we edged up to 1 (versus a -1 forecast), while the outlook was flat versus a -1 forecast. For non-manufacturing we rose to 16 from 14 prior and 12 forecast. This was the highest read since the early 1990s.  The outlook was 8, against an 11 forecast for these firms.
  • Broadly the improvement or elevated nature of conditions for larger firms suggests a supportive GDP growth. The chart below plots the current index levels for large firms (manufacturers in white, non in green) against y/y GDP growth. 

Fig 1: Tankan Large Firm Index Levels Versus Japan Real GDP Y/Y 

Keep reading...Show less