Japan Business Sentiment Highest Since 2021

2026-09-10 23:57 By Chusnul Chotimah 1 min. read

Japan’s Business Survey Index for large manufacturers rose to 7.6% in the third quarter of 2026 from -1.8% in Q2, far above market expectations of 2.5%.

It was the fastest pace of improvement since Q4 2021, amid government efforts to boost GDP growth and stronger government spending.

Looking ahead, manufacturing sentiment is expected to continue to expand, though at a softer rate, to 5.8% in Q4 and 4.9% in Q1 2027.

The index, based on a survey of major manufacturers, remains a key barometer for an economy where industrial output plays a central role.

The Bank of Japan raised its FY2026 GDP growth projection to 0.6% from 0.5% at its latest meeting, due to resilient domestic demand amid the government’s support measures.

However, the board warned that underlying inflation could exceed the 2% target amid the ongoing conflict in the Middle East.

For FY2027, the BoJ lifted its inflation forecast to 2.4% from 2.3%, while raising its GDP growth outlook to 0.8% from 0.7%.



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Japan Business Sentiment Highest Since 2021
Japan’s Business Survey Index for large manufacturers rose to 7.6% in the third quarter of 2026 from -1.8% in Q2, far above market expectations of 2.5%. It was the fastest pace of improvement since Q4 2021, amid government efforts to boost GDP growth and stronger government spending. Looking ahead, manufacturing sentiment is expected to continue to expand, though at a softer rate, to 5.8% in Q4 and 4.9% in Q1 2027. The index, based on a survey of major manufacturers, remains a key barometer for an economy where industrial output plays a central role. The Bank of Japan raised its FY2026 GDP growth projection to 0.6% from 0.5% at its latest meeting, due to resilient domestic demand amid the government’s support measures. However, the board warned that underlying inflation could exceed the 2% target amid the ongoing conflict in the Middle East. For FY2027, the BoJ lifted its inflation forecast to 2.4% from 2.3%, while raising its GDP growth outlook to 0.8% from 0.7%.
2026-09-10
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Japan’s Business Survey Index for large manufacturers unexpectedly fell to -1.8% in the second quarter of 2026 from 3.8% in Q1, the first negative reading since the second quarter of 2025. The latest reading missed market expectations of 4.2%, as businesses were weighed down by the Middle East conflict and surging oil prices. This heightened concerns about a potential economic slowdown, renewed inflationary pressures in Japan, and uncertainty over monetary policy. Looking ahead, manufacturing sentiment is expected to return to positive territory at 4.4% in Q3 and accelerate to 5.8% in Q4. The index, based on a survey of major manufacturers, remains a key barometer for an economy where industrial output plays a central role.
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Japan’s Business Survey Index for large manufacturers fell to 3.8% in the first quarter of 2026 from 4.7% in Q4, but remained in positive territory for the third consecutive quarter. The latest reading came in below market expectations of 5.5%, as businesses grappled with the Middle East conflict and surging oil prices. That heightened concerns about a potential economic hit and renewed inflationary pressures in Japan, while complicating the outlook for fiscal and monetary policy. Looking ahead, manufacturing sentiment is expected to weaken further to 0.7% in Q2 before rebounding to 6.3% in Q3. The index, based on a survey of major manufacturers, remains a key barometer for an economy where industrial output plays a central role.
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