Bank of Japan June Tankan: Large Manufacturers’ Sentiment Improves to +13, Non-Manufacturers Decline Amid Trump Tariffs

The Bank of Japan's June Tankan survey revealed a mixed outlook for Japan's corporate sector. Large manufacturers saw their business sentiment improve for the first time in two quarters, with the diffusion index rising to plus 13. This improvement was attributed in part to price pass-through, despite ongoing challenges from the US tariffs imposed under the Trump administration, which notably weighed on sectors such as automobiles and production machinery. Conversely, non-manufacturing large enterprises experienced a decline in sentiment for the first time in two quarters. Subsequent July data indicated that the manufacturers index edged up slightly from +6 in June to +7, while the non-manufacturers index remained steady at +30. Forecasts for October suggest a further rise in the manufacturers index to +8 and a decrease in the non-manufacturers index to +27.