Bank of Japan Tankan

BoJ March Tankan shows manufacturers leading the recovery.

Published quarterly by the Bank of Japan. Updated till the quarter of January-March 2017 (published on April 3, 2017).

Recent data trend:

According to the BoJ March Tankan Survey, the business conditions of Japanese companies improved in the first quarter of 2017. The improvements seem larger for manufacturers than for non-manufacturers. Large manufacturers saw their business condition improve for two consecutive quarters. The business condition of small manufacturers improved for three consecutive quarters and renewed its high since the Lehman shock. Manufacturers are benefiting from the weak yen and a steady expansion in their export volumes.

Tankan business condition DIs have high correlations with the level of profits for the same quarter. Thus, judging from the improvements in March, Japanese companies likely renewed their historical high in profits in the first quarter of 2017.

Japanese companies seem more positive regarding their capital expenditure outlook. Their capital expenditure plans including software in the fiscal year 2017 show 1.5% year on year expansion. The figure 1.5% may seem weak, but Japanese companies usually start their fiscal year with a conservative plan and revise them upward as the year progresses.  

We do see the relative under-performance of non-manufacturers in the Tankan survey as a sign of frailty though. Improvements in non-manufacturers' business conditions seem limited regardless of the corporate size and they are still planning to cut their part of capital investments. In our view, manufacturers alone cannot sustain the recovery momentum. The March BoJ Tankan showed that an economic expansion is in progress in Japan, but it is still largely dependent on exchange rates and the global economic conditions.  

Brief overview of "Tankan"

Tankan is a short-hand in Japanese for Tanki Kansoku, meaning Short-term Observation. The statistics is officially named in English as "Short-Term Economic Survey of Enterprises in Japan". Tankan surveys a total of 10,000 companies on their various business conditions and the results are one of the speediest indicators for corporate earnings. As you can see from charts below, Tankan's quarterly business condition DI results have very high correlations with the operating profit for quarter and Tankan results are published well in advance of most corporate disclosure for the quarter. For this reason, Tankan results attract close financial market attention, although in recent years the results do not move the market as much as they used to. Besides business condition DI, Tankan includes a whole set of DIs such as employment condition DI that gives indication on corporations' need for additional hiring. 

For more information, visit the official government page

Corporate profit and Tankan DI (manufacturers)

Corporate profit and Tankan DI (Non-Manufacturers)

Employment condition DI for large and small companies

Output price change DI for Mfgs and Non-Mfgs

Business Condition DI by Industry

Source: BoJ, JMA

The Next Release Date:  July 3rd, 2017

Suggested Pages

Consumer Confidence Index

Japan's consumer confidence index was 43.2 in April 2017, a decline of 0.7 points from the previous month.

View Page

Consumer Price Index

Core inflation turned negative in Japan in March.

View Page

Economy Watchers Survey

Eco Watchers Survey shows a moderate rebound in April.

View Page

Interest Rates

In April 2017, Japanese 10-year JGB interest rates was 0.03% on average.

View Page