| Consensus | Consensus Range | Actual | Previous | |
| Large Manufacturer Sentiment Index | 15 | 14 to 18 | 22 | 17 |
| Large Non-Manufacturer Sentiment Index | 36 | 34 to 37 | 37 | 36 |
| Small Manufacturer Sentiment Index | 4 | -3 to 6 | 9 | 7 |
| Small Non-Manufacturer Sentiment Index | 14 | -2 to 17 | 15 | 16 |
| Large Firms Capital Expenditure Plans | 10.2% | 9.0% to 12.0% | 11.5% | 10.9% |
| Small Firms Capital Expenditure Plans | -4.2% | -4.6% to -2.4% | -8.3% | -2.3% |
Highlights
The Bank of Japan's quarterly Tankan business sentiment survey showed an unexpected improvement among many large manufacturers in the June quarter as the positive impact of solid export demand for production machinery and computer chips appeared to have more than offset the drag from high producer prices caused by an earlier spike in global crude oil prices and domestic naphtha shortages. Non-ferrous metals producers saw their confidence unexpectedly jump from the March quarter while the auto industry sentiment slipped only slightly, indicating that those sectors have weathered the negative impact of stiff import duties slapped by the Trump administration last year.
Energy prices have eased from a recent peak triggered by the Mideast conflict while Japan has increased imports of crude and naphtha from the United States and other countries, reducing its heavy reliance on Mideast Gulf producers, at least temporarily. However, high procurement costs dented sentiment among major refineries. The recent U.S.-Iran ceasefire agreement seems to be not fully reflected in the June survey as most firms usually respond by the middle of the month.
Large non-manufacturer sentiment was propped up by hotels, restaurants and retailers as the persistently weak yen has revived spending by visitors from overseas, particularly from Asia except for China. Some Chinese tourists are still bypassing Japan over bilateral diplomatic rows. On the downside, materials supply constraints hurt sentiment among construction and real estate firms.
Despite uncertainty generated by the Mideast conflict, large firms revised up their plans to increase investment in factories and offices amid widespread labor shortages and strong needs to build artificial intelligence data centers. Smaller firms turned slightly more cautious compared to three months earlier.
Details:
BOJ June quarter Tankan large manufacturer sentiment index at +22 (Mar +17); median forecast +15
BOJ June Tankan large non-manufacturer sentiment index at +37 (Mar +36); median forecast +36
BOJ June Tankan smaller manufacturer sentiment index at +9 (Mar +7); median forecast +4
BOJ June Tankan smaller non-manufacturer sentiment index +15 (Mar +16); median forecast +14
BOJ June Tankan large mfg sentiment rises on firmer-than-expected non-ferrous metals, autos as they have weathered impact of stiff U.S. tariffs
BOJ June quarter Tankan large mfg sentiment's unexpected rise also led by production machinery, electronics in light of solid export growth
Most of BOJ June Tankan survey responses likely received before U.S.-Iran ceasefire deal signed
BOJ June quarter Tankan: sentiment among refineries down as they are hit by high global energy prices, Mideast crude supply squeeze amid Iran war
BOJ June quarter Tankan services sentiment rise led by hotels, restaurants, retailers; weak yen revives spending by visitors from overseas
BOJ June quarter Tankan: large manufacturers see surge in costs at faster pace than jump in sales prices; services also see costs, sales prices up
BOJ June Tankan shows financial positions little changed to only slightly tighter vs. March amid gradual BOJ rate hikes
BOJ June Tankan: large firm fiscal 2026 combined capex plans +11.5% y/y (Mar +3.3%); median forecast +10.2%
BOJ June Tankan: smaller firm fiscal 2026 combined capex plans -8.3% y/y (Mar -8.1%); median forecast -4.2%
BOJ June Tankan: major manufacturers see inflation at 2.3% a year from now vs. 2.2% forecast in Mar survey
BOJ June Tankan: major manufacturers see inflation at 2.2% in 3 years from now vs. 2.1% forecast in Mar survey
BOJ June Tankan: major manufacturers see inflation at 2.2% in 5 years from now vs. 2.0% forecast in Mar survey
BOJ June Tankan: all firms assume fiscal 2026 USD/JPY FX rate to average Y152.57 (Mar Y150.10)
BOJ March Tankan: all firms assume fiscal 2025 EUR/JPY FX rate to average Y175.62 (Mar Y171.77)
Market Consensus Before Announcement
Rising crude oil prices and concerns over potential disruptions to supplies of naphtha, chemical products and other materials stemming from tensions in the Middle East appear to have weighed on corporate sentiment, with the Bank of Japan's June Tankan survey expected to show sentiment among large manufacturers deteriorating for the first time in five quarters.
Still, the Middle East crisis is not expected to significantly alter corporate spending plans. Companies are seen revising up their capital expenditure plans in the June survey from projections made three months earlier.
While uncertainty surrounding the Middle East situation is expected to persist, companies are likely to continue investing in labor-saving technologies to address chronic worker shortages, as well as in AI-related projects such as data centers. Rising costs are also expected to inflate the value of planned investments, helping support overall capital spending plans.
Although the United States and Iran reached a tentative agreement last week aimed at easing tensions, the outlook for the Middle East remains uncertain. The development helped push international crude oil prices lower and lifted global equity markets. The two countries began high-level talks in Switzerland on June 22 to advance the agreement and seek a broader resolution to the conflict, although uncertainty remains.
The June Tankan diffusion index (DI) for large manufacturers is expected to stand at 15, down from 17 in March. The index would remain in positive territory for a 22nd consecutive quarter while marking its first quarter-on-quarter decline since March 2025, when it fell to 12 from 14. The index for small manufacturers is forecast to ease to 4 in June from 7 in March.
Still, the deterioration in sentiment among large manufacturers is expected to be modest, as the underlying economy remains resilient. Demand for automation amid labor shortages, along with government-backed digitalization and decarbonization initiatives, is expected to continue supporting business confidence.
Sentiment among large non-manufacturers is expected to remain unchanged at 36 in June from March, while the diffusion index for small non-manufacturers is forecast to fall for a second consecutive quarter to 14 from 16.
The BOJ raised interest rates at its June 15-16 policy meeting and maintained its stance of continuing monetary tightening in line with developments in the economy, prices and financial conditions. Despite U.S. tariffs, worsening Japan-China relations, rising inflation and higher interest rates, companies appear to have little room to scale back capital spending plans. Persistent labor shortages and continued demand for AI-related investments are expected to support capital expenditure. In addition, rising costs are likely to increase the value of planned investments, reinforcing overall spending plans despite lingering
geopolitical uncertainty.
Capital expenditure plans among large firms are expected to rise 10.2 percent from a year earlier in the June Tankan, accelerating from a 3.3 percent increase in the March survey. Smaller firms are also expected to strengthen their investment plans, with capital spending projected to fall 4.2 percent from a year earlier, compared with an 8.1 percent decline in March. Smaller firms typically begin the fiscal year with relatively conservative spending plans before gradually revising them higher as the year progresses.
Definition
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.
Description
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.