Key facts
- Japanese business confidence improved in August.
- Manufacturers' sentiment index rose to plus 18 in August, the highest since March 2026.
- Non-manufacturers' confidence climbed to plus 28.
- Strong demand for semiconductor-related products is driving robust order intake.
- Manufacturers forecast sentiment to ease to plus 16 in November.
Japanese business confidence saw an uptick in August, driven by strong demand in the semiconductor sector among manufacturers and robust domestic consumption supporting non-manufacturers, according to the latest Reuters Tankan survey. The manufacturers' sentiment index reached a high of plus 18, up from plus 13 in July, marking the best performance since March 2026. Non-manufacturers' confidence also improved, rising to plus 28 from plus 25.
The survey, which polled 510 firms and received 219 responses, indicated that semiconductor-related industries, particularly chemicals and machinery, were key drivers of the manufacturing sector's optimism. Managers reported significant order increases, with one precision machinery respondent noting an unprecedented volume of orders.
However, the transport equipment sector remained flat, reflecting mixed conditions in the automotive industry. The non-manufacturing sector's strength was broad-based, with notable improvements in wholesale trade, information services, and other services.
Looking ahead, manufacturers anticipate a stable sentiment, though the index is forecast to ease slightly to plus 16 in November, signaling some caution regarding the future business outlook. The non-manufacturers' index is expected to hold steady at plus 28.