BOJ June 2021 Tankan Survey

◆The BOJ June 2021 Tankan survey of corporate sentiment improved in both manufacturing and non-manufacturing in comparison to the previous survey, with business conditions DI (actual result) for large manufacturers at +14%pt, up by +9%pt in comparison to the previous survey, and large non-manufacturers at +1%pt, up by +2%pt. Business conditions DI continued to improve for large manufacturers with the expansion of world trade volume. Meanwhile, large non-manufacturers are still in the early stages of recovery. In some non-manufacturing industries, the impact of the spread of the COVID-19 infection remains strong, with the level of business conditions DI much lower than before the pandemic.

◆Business conditions DI (forecast) for large manufacturers was at +13%pt (-1%pt in comparison to the current survey), while large non-manufacturers were at +3%pt (+2%pt). Expectations for normalization of economic activities are seen to be increasing with progress in vaccination, centering on the non-manufacturing industries.

◆The FY2021 capex projection for all enterprises in all industries (incl. investment in properties, but not investment in software or research & development) is +7.1% y/y, revised upwards from the previous survey’s +0.5%. The fact that corporations are showing a proactive stance toward capex despite there being no expectations of the COVID-19 being brought quickly under control is considered to be a positive sign.