Japan’s solid demand lifts business mood in September

Japan’s business climate strengthened for five consecutive quarters in September due to strong global demand.

The headline index that measures big manufacturers’ sentiment stood at plus 18 in the third quarter. This was better than the plus 14 reading in the previous quarter, exceeding market forecasts of plus 13.

Big non-manufacturers’ sentiment index rose to plus 2 from plus 1 in June, marking a five-consecutive-quarter expansion. It surpassed a flat reading market forecast.

Consistent progress in vaccinations and optimism for a resumption of economic activity also helped improve non-manufacturers’ mood, reflecting the Bank of Japan’s belief that lifting state-of-emergency restrictions will boost consumption.

However, manufacturers anticipate that the business environment will worsen in the last quarter due to part shortages and Asian factory shutdowns.