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Weak Yen Supporting Business

JAPAN DATA

The Tankan report showed generally better economic conditions for Japan’s companies in Q3 and most of the data was stronger than expected as the recovery continues. The large manufactures’ index saw the second straight rise to 9 from 5 in Q2, the highest since Q2 2022, while the outlook rose to 10 from 9. Non-manufactures outperformed as they are more immune to uncertain global demand.

  • Non-manufacturers’ conditions improved to 27 from 23, the strongest since 1991, while the outlook for Q4 rose 1 point to 21. Services businesses continue to benefit from pandemic-related pent up demand.
Tankan survey large company business conditions

Source: MNI - Market News/Refinitiv

  • The weak yen is also supporting many industries as it is encouraging both domestic and foreign tourism and boosting goods exporters. For example, auto manufacturers saw strong results. USDJPY continues to approach 150 and is up 0.2% today to 149.62.
  • Small companies were not as strong but reported robust readings, although pessimists outweigh optimists in the manufacturing sector with it holding steady at -5 with the outlook deteriorating 1 point to -2. Small non-manufacturers also outperformed though rising to 12 from 11 and the outlook to 8 from 7.

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