Japan's central bank survey underpins optimism about growth

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TOKYO (AP) — Business sentiment among Japan’s large manufacturers stood unchanged in the latest quarter from the previous quarter, according to a closely watched survey called “tankan” released Tuesday.

The Bank of Japan survey put the benchmark index at plus-13 for the July-September quarter, the same from the previous survey conducted for April-June.

A positive number means more companies said they were optimistic about business conditions than those feeling pessimistic.

The index for large nonmanufacturers stood at plus-34, up from plus-33 the previous quarter.

The results were in line with analyst forecasts.

Japan’s economic growth is thought to be on relatively solid ground, managing to grow despite pressures from a declining workforce, a weakening currency and deflationary pressures that previously dragged on for years.

But recent data show average wages are holding up or in some sectors rising, adding to market optimism. Tourism, which brings in foreign revenue, is booming, now that restrictions related to the coronavirus pandemic were lifted.

The tankan is among the data being closely watched to show what the central bank might do on interest rates. The Bank of Japan ended negative interest rates in March and in July raised its short-term policy rate to 0.25%.

The Bank of Japan hopes to continue to raise rates if conditions appear to back the view that its 2% inflation target is being maintained.

The latest tankan showed that Japan’s companies expect consumer prices to rise 2.4% a year from now, the same rate as they said in the survey three months ago.

Japan’s economy, the world’s fourth largest, grew at an annual rate of 2.9%, according to government data, as wage growth and consumer spending kept growth going, despite risks from slowdowns in the Chinese and U.S. economies.

Political change is also a factor. Prime Minister Fumio Kishida resigned in a planned move Tuesday before his likely successor Shigeru Ishiba takes office later in the day. Major economic policy changes are not expected, however.

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Yuri Kageyama is on X: https://x.com/yurikageyama