The Bank of Japan's tankan quarterly survey for September, due out on Oct. 1, is expected to show slightly stronger business sentiment among major Japanese manufacturers, after the United States lowered its tariffs on Japanese cars and auto parts earlier this month.
The headline diffusion index (DI) for current business conditions among large manufacturers is projected at plus 14 for the September report, up 1 point from the previous June survey, according to estimates by 13 private think tanks.
The DI is calculated by subtracting the percentage of companies reporting bad business conditions from that of those seeing the opposite. The tankan survey is one of key economic indicators the central bank assesses when determining monetary policy.
Even after the reduction in the auto levies on Japan, U.S. President Donald Trump's tariffs "continue to weigh on business sentiment," an official at Mizuho Securities said.
The DI for major manufacturers' business conditions outlook over the next three months is estimated at plus 13, down 1 point.
Sentiment is expected to weaken, particularly among processing companies reliant on exports, amid a global economic slowdown, an official at the Japan Research Institute said.
The DI for current business conditions among large nonmanufacturers is forecast to fall 1 point from June to plus 33.
Demand from visitors to Japan, which has been a major source of revenue for nonmanufacturers, has already peaked out, an official at Norinchukin Research Institute said. Higher prices and labor shortages also present challenges to nonmanufacturers.
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