Japanese Manufacturers 'Confident' Despite Strong Yen

15 December 2003

Japanese manufacturing business confidence surged during the October-December quarter -- the second successive period in which the closely watched Tankan survey from the Bank of Japan has recorded an uplift in its 'business condition' diffusion index.

This is all the more impressive given the expected rise in the value of the yen this fiscal year, a factor that could weigh adversely on exports.

The all-important DI (diffusion index), which essentially charts the number of business 'optimists' versus the number of 'pessimists', rose sharply to +11, almost twice as rosy as analysts' expectations of +6.

However, the nation's commercial shoguns were less optimistic about the first quarter of the new year, their crystal balls predicting a DI reading of +8 by the time the March poll is taken. This slippage implies concern that a stronger yen will impact adversely on business outlook in the months ahead.

The current Tankan survey contacted 8,204 national companies, of which 98.3% responded during the period November 10 through December 11.

Data sourced from: The Wall Street Journal Online; additional content by WARC staff