Reuters Tankan report for December 2024, in summary:
- Manufacturers' Sentiment Turns Negative: December index fell to -1, down from +5 in November, marking the first negative reading in 10 months.
- Non-Manufacturers' Sentiment Improves: Index rose to +30 in December, up from +19 in November, with further improvement to +32 expected in March.
- Outlook for Improvement: Manufacturers' sentiment is projected to rebound to +5 in March, while non-manufacturers' sentiment is also expected to improve.
- Concerns in Manufacturing:
- Key industries (electronics, steel, metals) reported significant declines in confidence.
- Fears over U.S. protectionist policies and a prolonged Chinese economic slowdown are driving pessimism.
- Managers cited delayed investment projects and intensified trade war concerns as key challenges.
- Service Sector Resilience:
- Boosted by strong inbound tourism and improved ability to pass costs onto service prices.
- Transportation firms noted higher profits despite labor shortages.
- Economic Indicators:
- Japan’s Q3 GDP growth revised up to 1.2% annualized, driven by smaller declines in capital expenditure.
- Consumption revised downward, highlighting the fragility of the recovery.
- Risks to BOJ Forecast: Manufacturers' pessimism could challenge expectations of wage-driven recovery and inflation hitting the 2% target.
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Reuters Tankan is a monthly survey that seeks to track the Bank of Japan's tankan quarterly survey
- respondents spoke on the condition of anonymity
- Reuters Tankan indexes are calculated by subtracting the percentage of pessimistic respondents from optimistic ones. A positive reading means optimists outnumber pessimists.
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The Bank of Japan meet next week, 18 and 19 December.
