Key facts
- Japanese manufacturers' sentiment rose for the second consecutive month in June.
- The manufacturers' sentiment index increased to plus-13 from plus-8 in May.
- Strong demand for semiconductors boosted sentiment in the chemicals and machinery sectors.
- Non-manufacturers' sentiment rose to plus-32 from plus-29, driven by real estate and construction.
- Manufacturers anticipate stable sentiment in September, while non-manufacturers expect a decline.
Japanese manufacturers' sentiment has improved for the second consecutive month in June, reaching a reading of plus-13, up from plus-8 in May, according to the latest Reuters Tankan survey. This rise is largely attributed to sustained demand in the semiconductor industry, which has benefited chemical and machinery makers.
A manager at a chemical company noted, "Despite geopolitical tensions, demand remains robust, especially in semiconductor-related sectors." Similarly, a manager at an electronics firm stated, "Orders are booming, mainly driven by demand for the semiconductor market."
The survey, conducted between June 3 and June 12, involved 490 firms, with 215 responding. The sentiment index is calculated by subtracting the percentage of pessimistic responses from optimistic ones, with positive figures indicating net optimism.
Sentiment among non-manufacturers also saw an increase, rising to plus-32 from plus-29, primarily due to stronger confidence in the real estate and construction sectors. A real estate industry manager commented, "Despite rising costs, demand for housing remains robust, and we are seeing a steady flow of new projects."
Looking ahead, manufacturers expect sentiment to remain stable at plus-13 in September. However, non-manufacturers are more cautious, projecting their index to fall to plus-19, citing concerns over geopolitical risks and supply chain challenges. The transport machinery sector, which includes automakers, is particularly pessimistic, forecasting a drop to minus-13 in September from plus-13 in June, amid ongoing material sourcing difficulties due to geopolitical tensions.