Bank of Japan Q4 2024 Tankan report
- December big manufacturers index +14 (Reuters poll: 12) (at +14 this is the highest since March 2022)
- March big manufacturers index seen at +13 (Reuters poll: 11)
- December big non-manufacturers index +33 (Reuters poll: 32)
- March big non-manufacturers index seen at +28 (Reuters poll: 28)
- March small manufacturers index seen at 0 (Reuters poll: -2)
- December small manufacturers index +1 (Reuters poll: -1)
- December small non-manufacturers index +16 (Reuters poll: 12) (high
- March small non-manufacturers index seen at +8 (Reuters poll: 10)
- Japan all firms see dollar averaging 146.88 yen for FY2024/25
- Japan all firms see euro averaging 159.03 yen for FY2024/25
- Japan big manufacturers see dollar averaging 146.85 yen for FY2024/25
- December all firms employment index -36
- December all firms financial condition index +12 vs September +12
- December big manufacturers' production capacity index +3 vs September +2
- Japan big manufacturers see FY2024/25 recurring profits -5.2%
- Japan big firms see FY2024/25 capex +11.3% (Reuters poll: 9.6%)
- Japan small firms see FY2024/25 capex +4.0% (Reuters poll: 4.3%)
The headlines we have been seeing (see below the pic to what I posted earlier) seem to indicate the Bank of Japan will not raise rates at its meeting next week. But ... this is not too bad a Tankan report overall.
And, check out inflation expectations
- Japan firms expect consumer prices to rise 2.4% a year from now vs +2.4% in previous survey
- Japan firms expect consumer prices to rise an annual 2.2% 5 years from now vs +2.2% in previous survey
- Japan firms expect consumer prices to rise an annual 2.3% 3 years from now vs +2.3% in previous survey
I'm all for lower rates when appropriate ... but wow, you could make a case for a Bank of Japan rate hike next week on the results of this Tankan.
I posted the below earlier, ICYMI.
The Bank of Japan's (BOJ) Tankan survey is a key indicator of business sentiment. Its scheduled for release on December 13, 2024. This quarterly report assesses the confidence levels of Japanese enterprises and provides insights into economic conditions.
This Tankan survey is particularly significant as it will inform the BOJ's monetary policy meeting on December 18-19, 2024. Recent economic indicators suggest a complex backdrop:
Inflation: Japan's core inflation has remained above the BOJ's 2% target, with a 2.3% year-on-year increase in October. This persistent inflationary pressure has led to market expectations of a potential interest rate hike in December.
Economic Growth: The country's economic growth for the third quarter of 2024 was revised upward to an annualized 1.2%, driven by higher capital investment and exports. However, a decline in private consumption highlights underlying fragility in the recovery.
Yen Depreciation: The weakening of the yen has increased import costs, contributing to inflation and adding pressure on the BOJ to consider rate adjustments.
The Reuters Tankan Index provides a monthly snapshot assessing Japanese business sentiment. Its shown notable fluctuations in recent months, manufacturing sentiment in a downtrend in October and December:
October 2024: The manufacturing sentiment index rose to +7, up from +4 in September, indicating increased optimism among manufacturers. However, the service-sector index declined to +20 from +23, marking the fourth consecutive monthly drop, with sectors like transport and wholesale experiencing the most significant declines.
November 2024: Manufacturing sentiment decreased to +5, reflecting growing concerns over China's economic slowdown and persistent inflationary pressures. The service-sector index continued its downward trend, falling to +19, the lowest level since February 2023, influenced by rising costs and labor shortages.
December 2024: Manufacturing sentiment turned negative for the first time in ten months, with the index dropping to -1. This shift was attributed to worries about U.S. protectionist policies and the Chinese economy, leading to a more pessimistic outlook among manufacturers.
The case appears to be building for the Bank of Japan to remain on hold at its meeting next week:
