BOJ SEPT QUARTER TANKAN LARGE MANUFACTURER SENTIMENT INDEX AT 14 (JUNE 13); MEDIAN FORECAST 15

BOJ SEPT TANKAN SHOWS LARGE MFG SENTIMENT EDGES UP IN LIGHT OF US TRADE DEALS WITH JAPAN BUT MANY FIRMS CAUTIOUS FOR DEC AS TARIFF IMPACT TO EMERGE

BOJ SEPT TANKAN BIG FIRMS: AUTO INDUSTRY ONLY SLIGHTLY BEARISH ABOUT DEC SENTIMENT, STEEL MILLS SEE STABLE BUSINESS AFTER SLUMP

BOJ SEPT TANKAN LARGE NON-MANUFACTURER SENTIMENT INDEX AT 34 (JUNE 34); MEDIAN FORECAST 33

BOJ SEPT TANKAN LARGE NON-MFG SENTIMENT FLAT AS SENTIMENT AMONG HOTELS, RESTAURANTS PLUNGES AMID RISING COSTS, SLOWER INBOUND SPENDING

BOJ SEPT TANKAN: LABOR SHORTAGES DEEPEN ACROSS SECTORS, SEEN GETTING WORSE IN DEC, PARTICULARLY AMONG SMALLER FIRMS

BOJ SEPT TANKAN: MANY FIRMS SEE CONTINUED DROPS IN SALES PRICES, COST AFTER REPORTING FASTER FALL IN JUNE; MIXED OVER DEC FORECAST

HEADLINES FOR SMALL FIRMS
BOJ SEPT TANKAN SMALLER MANUFACTURER SENTIMENT INDEX AT 1 (JUNE 1); MEDIAN FORECAST 2

BOJ SEPT TANKAN SMALLER NON-MANUFACTURER SENTIMENT INDEX 14 (JUNE 15); MEDIAN FORECAST 14

CAPEX
BOJ SEPT TANKAN: LARGE FIRM FISCAL 2025 COMBINED CAPEX PLANS +12.5% Y/Y (JUNE +11.5, MAR +3.1%); MEDIAN FORECAST +11.3%
BOJ SEPT TANKAN: SMALLER FIRM FISCAL 2025 COMBINED CAPEX PLANS -2.3% Y/Y (JUNE -5.6%, MAR -10.0%); MEDIAN FORECAST -1.5%

PRICES
BOJ SEPT TANKAN: MAJOR MANUFACTURERS SEE INFLATION AT 2.0% A YEAR FROM NOW VS. 2.1% FORECAST IN JUNE SURVEY

BOJ SEPT TANKAN: MAJOR MANUFACTURERS SEE INFLATION AT 2.0% IN 3 YEARS FROM NOW VS. 2.0% FORECAST IN JUNE SURVEY

BOJ SEPT TANKAN: MAJOR MANUFACTURERS SEE INFLATION AT 1.9% IN 5 YEARS FROM NOW VS. 1.9% FORECAST IN JUNE SURVEY

FX
BOJ SEPT TANKAN: ALL FIRMS ASSUME FISCAL 2025 USD/JPY FX RATE TO AVERAGE Y145.68 (JUNE Y145.72)

BOJ SEPT TANKAN: ALL FIRMS ASSUME FISCAL 2025 EUR/JPY FX RATE TO AVERAGE Y160.65 (JUNE Y157.79)

The Bank of Japan’s quarterly Tankan business survey is forecast to show confidence picked up slightly among manufacturers, big and small, in the September quarter in light of trade deals between Washington and its (formerly) close allies while non-manufacturers were a tad more cautious amid sticky inflation that has left consumers wary of spending.

The outlook remains uncertain due to President Turmp’s erratic policymaking patterns. In addition, the move among Japanese carmakers to export their vehicles at a discount to the U.S. market is set to squeeze their profit margins and rising wages amid labor shortages are a headache for smaller firms.

The median forecast for the Tankan diffusion index on business conditions. The percentage of firms reporting improvement minus that of firms reporting deterioration. The figures for the previous quarter are in the parentheses.
--Large manufacturers: 15 (13)
--Large non-manufacturers: 33 (34)
--Smaller manufacturers: 2 (1)
--Smaller non-manufacturers: 14 (15)

Major firms are expected to project their plans for business investment in equipment and software would rise a combined 11.3% on the year in fiscal 2025 ending in March 2026, little changed from +11.5% planned in the June quarter but up sharply from +3.1% (the first estimate) in March. Capex plans are generally supported by demand for automation amid labor shortages as well as government-led digital transformation and emission control.

Smaller firms are expected to continue revising up their combined capital spending plans to just a 1.5% decrease after having lifted their plans to -5.6% in June from -10.0% (the first estimate) in March. Small and medium firms tend to have conservative plans at the start of each fiscal year and revise them up later.

The Tankan survey, which is conducted quarterly by the Bank of Japan, is considered the most complete reading of Japan's 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.