JP: Tankan

Tue Jun 30 18:50:00 CDT 2015

Consensus Actual Previous
Large Mfrs 12 15 12
Small Mfrs 0 0 1
CAPEX 3.4 -5.0

The Tankan survey, which takes the pulse of 10,500 businesses to get a feel for sentiment and capital spending plans, showed manufacturers and nonmanufacturers alike were more optimistic than forecast in the June quarter.

Large manufacturers reading climbed to 15 from 12 in the first quarter -- expectations were for a reading of 12. The reading for small manufacturers who primarily serve the domestic market was zero after plus 1 in the first quarter. Medium size manufacturers reading declined to plus 2 from plus 4. Large nonmanufacturers retreated with a reading of 34, down from 36 last time while small nonmanufacturers eased to 11 from 15.

The all-industries capital expenditures for large companies jumped to 9.3 percent, the highest figure since the final months of 2007. The overall assessment of business conditions held steady at 7, ahead of forecasts at 5.

This survey, which is conducted quarterly by the Bank of Japan, is considered the most complete reading of Japanese economic performance. The Tankan surveys individual components of the economy such as large and small manufacturing and nonmanufacturing enterprises. A key component of the survey deals with capital expenditures (CAPEX) going forward.

The Bank of Japan's Tankan survey is considered one of the most important indicators of the economy's health and helps the Bank of Japan determine monetary policy. It is widely used by investors to determine future investments in Japan. Firms are asked questions that cover a wide range of topics including the future direction of capital expenditure and pricing as well as the corporate outlook towards employment and the overall economy.

The data are broken down by large, medium and small manufacturers as well as the non-manufacturing sectors. A key number to watch is the all industries capital expenditure or CAPEX measures capital expenditure by all Japanese industries except the financial industry. The large manufacturers' index reflects the large international companies while the small manufacturers' index is reflects the domestic economy.