By TSUNEO SASAI/ Staff Writer
December 15, 2025 at 14:49 JST
Bank of Japan’s Head Office in Tokyo’s Chuo Ward (Asahi Shimbun file photo)
With concerns over U.S. tariff policies easing, business confidence among Japan’s major manufacturers improved for the third consecutive quarter, according to the Bank of Japan’s tankan survey released on Dec. 15.
The uptick in manufacturers’ confidence was driven by robust investment in artificial intelligence and the tailwinds of a weaker yen.
The survey results are likely to strengthen the case for the central bank to consider an additional interest rate hike at its policy meeting this week.
The survey’s headline index for large manufacturers rose 1 point from September to plus 15, marking sustained improvement in sentiment.
The tankan, conducted every three months, polls around 9,000 companies nationwide. Its diffusion index (DI) measures the percentage of firms reporting favorable conditions minus those reporting unfavorable ones.
In the manufacturing sector, electrical machinery improved by 1 point to plus 17, supported by strong demand for semiconductors used in data centers amid the global AI boom.
Steel rose 3 points to minus 11, aided by the yen’s depreciation under Prime Minister Sanae Takaichi’s administration, which bolstered export competitiveness. In contrast, automobiles fell 1 point to plus 9.
Negotiations over U.S. tariff policies have reduced uncertainty, providing relief to exporters.
Confidence among large non-manufacturers held steady at plus 34, maintaining a high level overall.
However, inflationary pressures weighed on consumer spending, as accommodation and food services declined 1 point to plus 25.
Meanwhile, retailers remained unchanged at plus 18.
Manufacturers expect conditions to remain flat over the next three months, while non-manufacturers anticipate a 6-point decline amid prolonged inflation.
Analysts also point to risks for tourism, particularly from a decline in Chinese visitors, as Japan-China relations deteriorate following Takaichi’s remarks on a potential Taiwan crisis.
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