BOJ September 2023 Tankan Survey

◆The results of the BOJ September 2023 Tankan survey of corporate sentiment were as follows: business conditions DI (actual result) for large manufacturers were at +9%pt (+4%pt in comparison with the previous survey), while large non-manufacturers were at +27%pt (+4%pt in comparison with the previous survey).

◆Looking at the breakdown of large manufacturers, the basic materials industries saw a significant rise in business conditions DI (actual result) (+6%pt in comparison with the previous survey). As for large non-manufacturers, business conditions DI (actual result) achieved major growth in electric and gas utilities (+36%pt in comparison with the previous survey). In addition, the increase in the number of foreign visitors to Japan and the revitalization of consumer mobility boosted business conditions DI (actual result) in accommodations, eating & drinking services (+8%pt in comparison with the previous survey) and retailing (+7% pt in comparison with the previous survey).

◆Looking at the difference between output price DI (actual result) and input price DI (actual result), while large manufacturers improved their profitability, large non-manufacturers marked time. It appears that progress has been made by the manufacturing industry in price pass-through in response to the rapid cost increases. In contrast, the movement toward price pass-through is gradually completing its course in the non-manufacturing industry. As for the forecast, both large manufacturers and non-manufacturers are expected to mark time. Signs have been detected suggesting that price pass-through in the manufacturing industry is heading for the completion of its cycle.

◆The FY2023 capex projection for all enterprises in all industries (including investment in properties, but not investment in software or research & development) is +13.0% y/y. Compared to the pattern of revisions in previous years, the upward revision was larger in for small-sized non-manufacturers. Overall, the results were solid, with relatively high growth rates indicated. It is believed that the appetite for capital investment in response to greening and digitalization is increasing.