| Consensus | Consensus Range | Actual | Previous | |
| Large Manufacturer Sentiment Index | 25 | 24 to 28 | 24 | 22 |
| Large Non-Manufacturer Sentiment Index | 36 | 34 to 38 | 35 | 37 |
| Small Manufacturer Sentiment Index | 11 | 10 to 12 | 14 | 9 |
| Small Non-Manufacturer Sentiment Index | 14 | 11 to 16 | 15 | 15 |
| FY Current | 2026 | |||
| Large Firms Capital Expenditure Plans | 12.1% | 11.7% to 12.8% | 11.3% | 11.5% |
| Small Firms Capital Expenditure Plans | -4.8% | -2.8% to -6.9% | -4.7% | -8.3% |
Highlights
The Bank of Japan’s Tankan business sentiment survey among large manufacturers improved for the sixth consecutive time in September, reaching the highest level in about eight and a half years. Corporate sentiment appeared to be supported by the rapid development of artificial intelligence, which appeared to have boosted demand for semiconductors and other AI-related products.
Sentiment among smaller manufacturers beat expectations as the Tankan diffusion index (DI) climbed to 14, the highest since December 2018, against the consensus forecast of 11 and up from nine in the previous June survey. The larger-than-expected rise was driven by increases in the index for sectors including automobiles, non-ferrous metals and general machinery.
The DI for large manufacturers rose to 24, matching the highest level since March 2018, compared with the median forecast of 25 and up from 22 in the June survey. The Tankan survey showed that the rise in large manufacturers’ sentiment was led by sectors including oil and coal, steel and non-ferrous metals, while it was partly offset by declines in food and lumber and wood.
Details:
BOJ Sept quarter Tankan large manufacturer sentiment index at +24 (June +22); median forecast +25
BOJ Sept Tankan large mfg sentiment rises to highest since March 2018
BOJ Sept Tankan shows large mfg sentiment rise led by oil/coal, steel, non-ferrous, while offset by falls in food, lumber/wood
BOJ Sept Tankan smaller manufacturer sentiment's larger-than-expected rise driven by autos, non-ferrous metals, general machinery
BOJ Sept Tankan large non-manufacturer sentiment index at +35 (June +37); median forecast +36
BOJ Sept Tankan smaller manufacturer sentiment index at +14 (June +9); median forecast +11
BOJ Sept Tankan smaller non-manufacturer sentiment index +15 (June +15); median forecast +14
BOJ Sept Tankan shows large mfg sentiment rise led by oil/coal, steel, non-ferrous, while offset by food, lumber/wood
BOJ Sept Tankan smaller manufacturer sentiment's larger-than-expected rise driven by autos, non-ferrous metals, general machinery
BOJ Sept Tankan: large firm fiscal 2026 combined capex plans +11.3% y/y (June +11.5%); median forecast +12.1%
BOJ Sept Tankan: smaller firm fiscal 2026 combined capex plans -4.7% y/y (June -8.3%); median forecast -4.8%
BOJ Sept Tankan: major manufacturers see inflation at 2.3% a year from now vs. 2.3% forecast in June survey
BOJ Sept Tankan: major manufacturers see inflation at 2.3% in 3 years from now vs. 2.2% forecast in June survey
BOJ Sept Tankan: all firms assume fiscal 2026 USD/JPY FX rate to average Y154.23 (June Y152.57)
BOJ Sept Tankan: all firms assume fiscal 2026 EUR/JPY FX rate to average Y177.86 (Mar Y175.62)
Market Consensus Before Announcement
The Bank of Japan's September Tankan business sentiment survey among large manufacturers is expected to climb to the highest level in nearly nine years as the rapid development of artificial intelligence has steadily boosted demand for semiconductors, data centers and other AI-related sectors, supporting an improvement in large manufacturers' business sentiment.
Sentiment among non-manufacturers is expected to remain solid but could deteriorate slightly as rising costs caused by higher inflation, rising import values amid the yen's weakness and volatile energy prices, as well as higher interest rates, are expected to weigh on sentiment among non-manufacturers, including businesses such as construction, real estate, hotels and retailers.
The September reading of the Tankan diffusion index (DI) for large manufacturers is expected to stand at 25, up from 22 in June. The September DI is expected to match the highest level seen in the December 2017 survey. The DI is seen improving for the sixth consecutive survey, the longest such streak in 16 years, since it climbed steadily from minus 58 in the March 2009 survey to plus eight in September 2010.
Sentiment among small manufacturers is also expected to improve to 11 in September from nine in June. The DI for small manufacturers is expected to improve for the second consecutive survey and mark the eighth straight positive reading.
Non-Manufacturers Seen Slowing
Despite the steady improvement among large manufacturers, underlying sentiment among Japanese corporations in general lacks convincing momentum amid a slew of uncertainties surrounding businesses. Geopolitical concerns in the Middle East have kept energy, oil product and chemical prices volatile and continued to raise concerns over material shortages. Higher inflation is prompting interest rate hikes by Japanese and U.S. central banks this month, and such monetary tightening could have an impact on a wide range of industries.
Sentiment among large nonmanufacturers is expected to edge down to 36 in September from 37 in June, while the diffusion index for small nonmanufacturers is also expected to ease to 14 from 15.
Domestic corporate goods prices have risen due to the impact of soaring resource and energy prices, and higher costs are likely to weigh on business conditions for nonmanufacturers. In addition, inbound demand has recently been losing momentum, and improvements in business conditions are expected to pause in sectors such as retail and accommodation and eating and drinking services.
Capex Plans Higher
Capital expenditure plans are expected to remain solid, with large companies likely to revise up their plans amid strong investment demand in semiconductor-related fields and data centers, driven by growing AI demand, as well as strong medium- to long-term investment demand for green transformation and supply chain resilience. Smaller firms are also expected to follow suit and revise their plans upward, as they typically begin the fiscal year with relatively conservative spending plans before gradually revising them higher as the year progresses.
Capital expenditure plans among large firms are expected to rise 12.1 percent from a year earlier in the September survey, accelerating from 11.7 percent in June. Smaller firms are also expected to revise up their spending plans to minus 4.8 percent in September from minus 8.3 percent in June.
Still, spending plans may become less certain in the coming months as uncertainty surrounding the Middle East situation remains high. In addition, yields on 10-year Japanese government bonds climbed above 3% in early September for the first time in more than 30 years. If higher resource prices and supply constraints become more severe, or if long-term interest rates rise sharply, companies may need to adopt more conservative investment plans.
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.