Japan’s Q1 Tankan survey revealed a mixed outlook for the economy, with sentiment among large manufacturers slipping for the first time in a year. The index fell from 14 to 12, in line with expectations, as steel and machinery producers grew more cautious amid weak global demand, rising input costs, and uncertainty surrounding US tariff policy.
However, manufacturing outlook ticked down just slightly to 12, beating expectations of a sharper decline to 9, indicating that businesses remain cautiously optimistic.
In contrast, Japan’s services sector showed remarkable resilience. The large non-manufacturing index rose from 33 to 35—marking the highest level since 1991. Still, the outlook component was flat at 28, slightly missing forecasts of 29.
Capital expenditure plans were also encouraging, with large firms expecting a 3.1% increase for fiscal 2025, ahead of consensus of 2.9%.
