YURI KAGEYAMA - AP Business Writer
•7/1/2026
TOKYO (AP) — Business sentiment among major Japanese manufacturers has improved for a fifth straight quarter, the Bank of Japan said in its quarterly “tankan” survey released Wednesday.
The survey's so-called diffusion index rose to 22 from 17 in the previous quarter, the BOJ said. The index for large non-manufacturers, such as services, edged up to 37 from the last tankan 's 36.
The survey is an indicator of companies foreseeing good conditions minus those feeling pessimistic.
Higher fuel prices due to the Iran war have added to inflationary pressures in Japan, though crude oil prices have fallen since the U.S. and Iran agreed on an interim deal to end the war.
Although a weak yen raises the value of exports’ earnings when converted into yen, a boon for Japan’s giant exporters, that positive is starting to be countered by the big negative of rising energy prices.
Japan imports nearly all of its oil and gas, and the yen’s recent decline to near a 40-year low has added to those concerns given recent high oil prices.
The U.S. dollar was trading at about 162 yen on Wednesday.
Last month the Bank of Japan raised its benchmark interest rate to 1%, a three-decade high, citing challenges stemming from a weak Japanese yen and higher prices. The central bank has been trying to normalize monetary policy lately after decades of keeping interest rates near or below zero.
Analysts say Japan's economic indicators, such as investments, remain relatively strong despite longer term problems such as a chronic labor shortage due to an aging and declining population.
“Sales remain firm, especially for large enterprises, but profits are expected to weaken,” said Amova Asset Management Chief Global Strategist and Chief Economist Naomi Fink said about the tankan.
“Fixed investment plans are strong for large and mid-size firms but less so for small firms.”
Yuri Kageyama is on Threads: https://www.threads.com/@yurikageyama
