Japan Tankan large manufacturing index dropped to 5 in Q3, down from 7 but beat expectation of 2. That’s the third straight quarter of decline and was the lowest level since June 2013. Large manufacturing outlook also dropped to 2, down from 7 but beat expectation of 1.
Non-manufacturing index dropped to 21, down from 23 and beat expectation of 20. Non-manufacturing outlook dropped to 15, down from 17, but missed expectation of 16. Large all industry capex rose 6.6%, slowed from 7.4% and missed expectation of 7.0%.
The data suggested that business confidence worsened as global slowdown and trade tensions weighed. Yet, the deteriorations were not as bad as expected and capital expenditure were still holding up. The data could be neutral to BoJ’s policy. That is, they might not add enough pressure to additional easing from the central bank.
Also released, unemployment rate was unchanged at 2.2% in September, better than expectation of 2.3%.
