Good Vibes in Japan Business
So, Japan just did a check-in on how businesses are feeling, and it turns out they’re feeling pretty positive in the third quarter. This could mean good things for the economy, especially for non-manufacturers. Even though the world’s a bit uncertain right now, this boost in mood suggests Japan might be on the road to a strong economic comeback.
Japan Retailers Catching the Wave
Guess what? Non-manufacturers are riding high, hitting mood levels not seen since 1991. Back then, Japan was in the middle of a bubble with asset prices going through the roof. This surge now shows that retailers are cashing in on people spending more, especially after the pandemic restrictions got kicked to the curb. Companies are keeping their spending plans strong, and with jobs being in demand, it looks like the Bank of Japan might start thinking about pulling back on the big stimulus.
Japan Manufacturers Feeling Confident
The Bank of Japan keeps a close eye on something called the “tankan” survey, and it says big manufacturers are feeling pretty confident. Their confidence index went up to 9 in September from 5 in June. That’s even better than what experts were guessing (they thought it’d be 6). The good vibes aren’t just for manufacturers; big non-manufacturers have their index at 27, up from 23. That’s the highest it’s been since November 1991.
Economic Boost in Action
Marcel Thieliant from Capital Economics says the strong improvement in the tankan survey hints that Japan’s economy is on a roll. It’s expanding faster than usual, and that’s causing some issues like not having enough staff and prices going up.
Companies are managing to pass on those higher costs to consumers, and that’s putting a smile on business faces. Plus, things like more cars being made and cheaper raw materials are adding to the good vibes.
Big Plans for Spending and Jobs
According to the tankan, big companies are gearing up to spend more money. They’re looking at a 13.6% increase in capital expenditure this fiscal year, matching what the experts predicted. This comes after a 11.7% rise in spending during the last fiscal year. And guess what? Jobs are getting harder to find, especially for big manufacturers, the hardest since 2019, and for non-manufacturers, the toughest since 1992.
Global Worries and What’s Next
While things seem sunny in Japan, there’s still a bit of worry about what’s happening around the world. Global demand isn’t exactly doing a victory dance, and China’s economy is showing some weak spots. Yoshimasa Maruyama from SMBC Nikko Securities points out, “Japan is on track for a domestic-demand led growth. But the overseas outlook is a source of concern, such as whether the U.S. economy can achieve a soft landing.”
BOJ’s Move and Inflation Forecast
The Bank of Japan is going to take a close look at the tankan results to figure out if it’s time to talk about raising interest rates. When it comes to prices, companies are expecting a 2.5% increase a year from now, 2.2% in three years, and 2.1% in five years. This is pretty much in line with what they were thinking three months ago. Japan’s economy was flexing some muscles with a 4.8% expansion in April-June, but experts think the next quarter might see a bit of a slowdown because of not-so-hot global demand affecting exports.
So, as companies keep raking in the cash and people keep spending, the big question is whether wages will keep going up. And that could be the green light for the Bank of Japan to slowly ease off on the huge money boost they’ve been giving.