Business sentiment among large Japanese manufacturers improved marginally in the second quarter, according to the Bank of Japan’s latest tankan survey released Tuesday, but concerns remain high over US trade policies under President Donald Trump.
According to news agency AP, the index for large manufacturers rose to +13 in June, up from +12 in March, indicating more companies are optimistic than pessimistic about business conditions.
The survey, seen as a key indicator ahead of the central bank’s next monetary policy meeting, pointed to a modest recovery in Japan’s manufacturing sentiment. The auto and electronics industries, which are heavily export-oriented, continue to worry about rising US tariffs.
The Trump administration has already imposed 25% tariffs on imported automobiles and 50% on steel and aluminium. Many Japanese automakers, including Toyota, have operations in Mexico, also under pressure from US trade moves.
Trump recently took to social media, criticising Japan for not purchasing enough American rice, saying, “They won’t take our RICE, and yet they have a massive rice shortage,” while warning that a letter to Japan was forthcoming.
Despite such tensions, Japan’s unemployment rate held steady at 2.5% in May. The BOJ has maintained its benchmark interest rate at 0.5% after raising it earlier this year from 0.1%, but analysts say further hikes may be delayed, given the global uncertainty.
The yen continues to weaken against the dollar, trading near 140 per US dollar, which benefits Japanese exporters but raises input costs, worsening import bills.
Meanwhile, the tankan showed a slight dip in sentiment among large non-manufacturers, slipping from +35 to +34, still stronger than market expectations.
According to news agency Reuters, a PMI survey showed Japan’s manufacturing sector expanded for the first time in over a year in June, with the final au Jibun Bank Japan Manufacturing PMI rising to 50.1.
Although the result narrowly crossed into expansion territory, new orders dropped for the 25th straight month due to ongoing trade uncertainty. "The latest PMI data signalled that demand conditions remained challenging," said Annabel Fiddes of S&P Global Market Intelligence,as cited by Reuters, adding that "uncertainty over US tariffs" weighed heavily on sentiment, particularly in the semiconductor and auto industries.
Still, the improvement in output and employment offers some optimism. “Companies were more hopeful when looking ahead,” Fiddes noted, pointing to increases in both hiring and production in June.
Overall, Japan's economic outlook remains fragile, with sentiment caught between domestic stability and external risks linked to US tariff brinkmanship.
According to news agency AP, the index for large manufacturers rose to +13 in June, up from +12 in March, indicating more companies are optimistic than pessimistic about business conditions.
The survey, seen as a key indicator ahead of the central bank’s next monetary policy meeting, pointed to a modest recovery in Japan’s manufacturing sentiment. The auto and electronics industries, which are heavily export-oriented, continue to worry about rising US tariffs.
The Trump administration has already imposed 25% tariffs on imported automobiles and 50% on steel and aluminium. Many Japanese automakers, including Toyota, have operations in Mexico, also under pressure from US trade moves.
Trump recently took to social media, criticising Japan for not purchasing enough American rice, saying, “They won’t take our RICE, and yet they have a massive rice shortage,” while warning that a letter to Japan was forthcoming.
Despite such tensions, Japan’s unemployment rate held steady at 2.5% in May. The BOJ has maintained its benchmark interest rate at 0.5% after raising it earlier this year from 0.1%, but analysts say further hikes may be delayed, given the global uncertainty.
The yen continues to weaken against the dollar, trading near 140 per US dollar, which benefits Japanese exporters but raises input costs, worsening import bills.
Meanwhile, the tankan showed a slight dip in sentiment among large non-manufacturers, slipping from +35 to +34, still stronger than market expectations.
According to news agency Reuters, a PMI survey showed Japan’s manufacturing sector expanded for the first time in over a year in June, with the final au Jibun Bank Japan Manufacturing PMI rising to 50.1.
Although the result narrowly crossed into expansion territory, new orders dropped for the 25th straight month due to ongoing trade uncertainty. "The latest PMI data signalled that demand conditions remained challenging," said Annabel Fiddes of S&P Global Market Intelligence,as cited by Reuters, adding that "uncertainty over US tariffs" weighed heavily on sentiment, particularly in the semiconductor and auto industries.
Still, the improvement in output and employment offers some optimism. “Companies were more hopeful when looking ahead,” Fiddes noted, pointing to increases in both hiring and production in June.
Overall, Japan's economic outlook remains fragile, with sentiment caught between domestic stability and external risks linked to US tariff brinkmanship.
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