Tuesday, June 18, 2019 - 22:30

MNI DATA PREVIEW: BOJ Tankan To Show Dip In Business Sentiment

TOKYO (MNI) - The Bank of Japan's June quarter Tankan survey, due July 1, will show a drop in sentiment among many business sectors from three months ago, as trade friction and heightened uncertainties over the global outlook continue to weigh, economists said.

The Tankan will show that both major and smaller companies revised capital investment plans higher, although implementation may be delayed.


The median economist forecast for the diffusion index (DI) for sentiment among major manufacturers is +10, down from +12 in March, for the second straight drop, with forecasts ranging from +7 to +11.

Economists said that companies, especially major manufacturers, are seeing lower exports caused by the slowing Chinese economy and weak capital investment overseas.

Non-manufacturers continue to suffer from labor shortages, although they were benefiting solid demand by foreign visitors.

The diffusion index is calculated by subtracting the percentage of companies reporting deteriorating business conditions from those reporting an improvement. A positive figure indicates the majority of firms see better business conditions.

The median forecast for the DI for major non-manufacturers is +20 in June, down from +21 in March. The forecasts ranged from +19 to +22.

The sentiment index for small manufacturers is projected to be +4 in June, down from +6 in the previous survey. The sentiment for small non-manufacturers is also forecast to slip to +11 from +12.

Japan's economy grew at a faster pace than initially estimated in the January-March quarter, with business investment stronger than initially seen.

The economy rose 0.6% on quarter, or an annualized 2.2%, in Q1 thanks to stronger capital investment and positive contribution from net exports, revised from +0.5% on quarter, or an annualized +2.1%.

The upward revision came mainly from higher capital investment, revised up to a 0.3% gain (the MNI median forecast was +0.5%) from a preliminary -0.3% following. There was a 2.7% gain in Q4.

But the economy seems to be slowing in the second quarter in the wake of weak exports and industrial production.


Capital investment plans by both major and smaller firms are likely to be revised up from three months ago and will be closely watched by the BOJ. The median economist forecast for major firms is +9.3% on year, up from +1.2 in the March Tankan.

The forecast for capex plans among smaller firms is -9.5%, up from -14.9% in March.


BOJ officials are focused on corporate inflation forecasts, which are part of the June Tankan survey but will be released on July 2.

In the March survey, companies on average saw the inflation rate for one and three years ahead unchanged from three months ago, while slightly lowering their inflation outlook for five years ahead.

Firms on average expect an annual consumer inflation rate at 0.9% a year from now, unchanged from 0.9% in December. Companies also expect a 1.1% rise three years out, also unchanged from December. But they expect five years ahead numbers to fall to 1.1% in March from 1.2% in December.

--MNI Tokyo Bureau; tel: +81 90-2175-0040; email:
--MNI London Bureau; tel: +44 203-586-2225; email:

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