Japan big makers confidence improves in Dec., supporting BOJ rate hike bets
TOKYO, Dec. 15 Kyodo - Business confidence among major Japanese manufacturers improved for the third consecutive quarter in December, the Bank of Japan's Tankan survey showed Monday, supporting expectations of an interest rate hike by the central bank later this week.
Reflecting easing uncertainty over higher U.S. tariffs, the index measuring confidence among companies such as those in the auto and electronics sectors rose from 14 three months earlier to 15, the highest level since December 2021, matching the average market forecast in a Kyodo News tally.
The index for large nonmanufacturers, including the service sector, was unchanged from the previous survey in September at 34, but it is expected to worsen to 28 in three months due to growing concerns over a decline in overseas tourists resulting from the worsening relationship between Japan and China.
The Tankan index represents the percentage of companies reporting favorable conditions minus the percentage reporting unfavorable ones.
Big manufacturers' confidence is projected to remain unchanged at 15 after hefty U.S. levies imposed by U.S. President Donald Trump were reduced in September in return for massive Japanese investment in the United States under a bilateral trade deal in July.
"As uncertainty over the U.S. tariffs has receded, manufacturers have been broadly resilient," Yuichi Kodama, chief economist at the Meiji Yasuda Research Institute, said.
"On prospects of nonmanufacturers, it's unlikely that their sentiment will significantly worsen compared to manufacturers, so there is no need to be overly concerned," he added.
The latest Tankan data will be among the materials reviewed at the BOJ's two-day policy meeting ending Friday, when the bank is widely expected to raise its key interest rate for the first time since January.
Sentiment among manufacturers in the oil and coal products industry surged to 33 in September from zero, leading the overall improvement amid receding fears over the adverse impact of U.S. trade policy.
Confidence in the chemicals sector rose to 22 from 15, helped by strong demand for semiconductors, according to the quarterly report.
Sentiment in motor vehicles deteriorated from 10 to 9, but it is expected to rebound to 10.
Among nonmanufacturers, confidence among transport and postal activities climbed by 1 point to 27 as companies passed on rising costs to sales prices.
Meanwhile, confidence in accommodations and eating services slipped from 26 to 25 and is projected to deteriorate to 19, due to concerns over a possible decline in the number of Chinese travelers.
Reflecting recent weakness in the Japanese currency, companies expect the U.S. dollar to trade at 147.06 yen in fiscal 2025 through March, compared with 145.68 yen in the previous survey in September, the central bank said.
The BOJ surveyed 8,836 companies, of which 99.4 percent responded between Nov. 11 and Friday.
==Kyodo
